
[Photo by Vishnu Mohanan]
Trump said the tariffs would take effect “in the very near future,” and could range from 25% to 100% to encourage more semiconductor manufacturing in the U.S.
“If you want to stop paying the taxes or the tariffs, you have to build your plant right here in America,” Trump said, according to the Washington Post.
Chips and semiconductors are crucial components for modern medical devices and the next-generation systems that increasingly use advanced electronics and software for better and more efficient patient care.
A similar threat to tax imports from Mexico caused Intuitive leaders to warn it could hurt the surgical robotics developer’s business by increasing costs of its instruments. The company hasn’t yet said whether it would respond by charging customers more, taking less profit or moving that manufacturing from Mexico to the U.S.
Trump is back: Here’s what his initial actions mean for medtech
The new import taxes could lead to higher demand for products made in U.S. semiconductor fabrication plants, and thus higher prices or less availability of those chips.
While the U.S. is home to leading chip designers such as Nvidia, Intel and AMD, most chips are manufactured overseas. Those companies all outsourcing manufacturing to Taiwan Semiconductor Manufacturing Co. (TSMC), which makes a majority of the world’s chips in Taiwan.
The medical device industry has weathered semiconductor supply shocks before. Most recently, chip buyers across all industries underestimated future demand. during the first couple of years of the COVID-19 pandemic and were caught in short supply when consumer spending roared back. At the same time, Russia’s invasion of Ukraine also boosted demand while simultaneously choking supply of materials and equipment used for semiconductor fabrication.
“We took it on the chin big time,” Stryker CEO Kevin Lobo said of 2022’s semiconductor shortage.
Medtronic said in 2022 that its sales were lower than expected due to semiconductor shortages and other supply chain problems, while other medical device companies said they removed chips from their designs to keep products moving.
Related: 5 steps to help medical device makers deal with semiconductor shortages