Semiconductor Shakeup: Tariffs, CHIPS Act Uncertainty, and the Industry’s Strategic Crossroads

The semiconductor industry has been at the center of U.S. economic and political focus for the past several years, bolstered by historic investments through the CHIPS Act and renewed efforts to rebuild domestic manufacturing capacity. But recent developments are signaling a new era of uncertainty—and a critical inflection point that could reshape the trajectory of semiconductor growth in the U.S.

Industry Questions: Tariff Pressures and Potential CHIPS Act Uncertainty

In recent months, the semiconductor industry has been caught in a growing storm of political and economic debate. On one side, U.S. policymakers are proposing sweeping tariffs on imported semiconductors, designed to push global giants like TSMC and Samsung to expand their U.S. production footprints. These new tariffs—starting at 25% and potentially climbing higher over time—aim to reignite domestic manufacturing, but they also threaten to drive up costs for U.S.-based manufacturers are still heavily reliant on foreign supply chains (Reuters, Wired).

At the same time, the CHIPS and Science Act—once considered a pillar of the U.S. semiconductor revival—is entering a new phase of political scrutiny. On March 31, 2025, President Trump signed an executive order establishing the United States Investment Accelerator, a new office within the Department of Commerce tasked with overseeing CHIPS implementation. Designed to expedite semiconductor investments, the initiative focuses on cutting red tape and streamlining federal permitting processes to accelerate domestic manufacturing.

However, companies now face the possibility of losing access to grant funding unless they meet tougher standards. The administration’s stance introduces significant uncertainty for projects built on expectations of federal support—particularly workforce development programs, many of which were poised to scale under the CHIPS framework (Reuters, Wired).

Commerce Secretary Howard Lutnick has reinforced this message, warning that CHIPS Act grants may be withheld from companies that don’t significantly expand their U.S. operations. This marks a sharp shift from earlier funding practices and signals a more aggressive approach to securing long-term domestic investment.

The contradiction is clear: while U.S. firms are being pushed to ramp up domestic chip production, access to the funds needed to train and sustain the skilled workforce behind that expansion is becoming more conditional—tied to investment scale, strategic value, and national security alignment.

These twin pressures—rising costs from proposed tariffs and growing uncertainty around grant disbursements—are reshaping the competitive landscape. Companies like Intel and TSMC, already navigating complex regulatory hurdles and ambitious buildout timelines, must now contend with shifting political requirements that could alter the financial viability of their U.S. manufacturing plans.

A Strategic Inflection Point: More Than Just Policy Shifts

While proposed tariffs and growing uncertainty around CHIPS Act grant disbursements are adding new layers of complexity, many experts remain optimistic about the semiconductor industry’s long-term trajectory—if companies can scale with foresight and flexibility.

At this year’s SEMI FOA Collaborative Forum, one message was clear: the global semiconductor market is poised for recovery in 2025. Industry leaders pointed to a combination of AI-driven demand, government-backed initiatives in the U.S. and Europe, and aggressive global fab expansions as key forces shaping the next wave of semiconductor development.

As an exclusive gathering of senior industry leaders and experts, FOA offered a clear preview of what’s next in semiconductor manufacturing—and why workforce readiness remains the linchpin of future growth. FOA participants returned to one critical constraint: the availability of skilled talent to match the scale and speed of investment.

A $1 Trillion Semiconductor Market—And the Talent It Will Require

Industry projections presented at FOA estimate that the global semiconductor market could hit $1 trillion by 2030, fueled by strong year-over-year growth averaging 10% annually starting in 2023. Much of this expansion will be powered by AI, high-performance computing (HPC), and data center demand, reflecting the explosion of AI model training and next-gen infrastructure requirements.

Among the notable trends discussed:

• Integrated circuit (IC) sales are projected to surge 23% in the first quarter of 2025 alone, as AI and HPC continue to drive chip demand to new heights.
• AI-related semiconductor investments are expected to top $250 billion in 2025, according to a synthesis of company data, Morgan Stanley analysis, and SEMI projections.
• To meet demand, global fabrication (fab) capacity is set to grow dramatically—with 300mm fabs anticipated to add over 5 million wafers per month by 2026, representing an estimated 29% increase in total capacity.
• Spending on semiconductor manufacturing equipment is forecasted to reach $113 billion in 2024, with sustained momentum projected into subsequent years as fabs come online and ramp up production.

The scale and speed of these developments are staggering, but they also highlight a critical gap: who will operate these fabs, manage production, and ensure quality at scale?

As FOA participants repeatedly noted, the workforce challenge isn’t five years away—it’s here today. Companies that are expanding their U.S. footprint or reshoring operations are already encountering difficulties in hiring, onboarding, and retaining skilled workers. Without strategic workforce development, the promise of expanded production could be undercut by a lack of human capital to support it.

While the semiconductor market’s growth trajectory looks promising, the companies best positioned to capitalize on this next era will be those that recognize and address their workforce readiness as a core part of their strategy—starting now.

Balancing Optimism with Realism

So while many expect a rebound, the companies that thrive in the next era will be those that stay prepared.

• Companies that were counting on stable policy support may need to rethink how they build internal resilience.
• This is a moment that calls for recalibration—not retreat.

The reality is this: whether incentives shrink or tariffs rise, companies that have invested in operational and workforce readiness will have more options and greater agility to navigate whatever comes next.

Challenges That Will Shape the Next Era of Semiconductor Growth

1. Cost Pressures and Supply Chain Recalibration

If tariffs on imported chips and components are enacted—and especially if they escalate—costs will increase at nearly every stage of production. Companies will be forced to rethink their supply chains, balancing the rising pressure to reshore elements of production with the practical realities of global sourcing. This will require rethinking supplier relationships, production logistics, and cost control strategies from the ground up.

2. Uncertain Workforce Strategies

The U.S. semiconductor talent shortage—already a critical bottleneck—will be underscored if access to CHIPS Act workforce funding becomes more conditional or delayed. The Semiconductor Industry Association (SIA) has projected that up to 50% of new semiconductor roles could go unfilled without significant action (SIA Workforce Blueprint). McKinsey reports a severe shortfall of engineers, technicians, and operators needed to sustain the industry’s ambitious growth goals (McKinsey). Without robust pipelines, even well-funded fabs will struggle to stay competitive.

3. Operational Agility Under Shifting Trade and Policy Pressures

With tariffs, supply chain disruption, and shifting regulatory dynamics, companies will need to pivot quickly to sustain production and respond to evolving policy dynamics. Those without internal agility—whether in workforce, leadership, or operations—will be left scrambling to adjust.

4. Leadership Readiness to Navigate Uncertainty

Ultimately, this is a leadership challenge. The next chapter will be led by companies whose leaders can act decisively in ambiguity, steering teams through both expansion and constraint with resilience and focus.

What Should Semiconductor Leaders Be Thinking About Now?

Rather than prescriptive solutions, this is a moment for smart, forward-looking questions:

• Are we too dependent on specific supply chain partners, and how would rising tariffs affect our operations?
• If workforce development grants become harder to access or more conditional, how are we prepared to build, train, and retain the talent we need?
• What critical knowledge inside our organization is undocumented—and how do we ensure it’s captured and shared?
• Do we have a leadership framework in place to navigate rapid changes, whether regulatory, economic, or operational?

This Is a Moment to Lead Strategically—Not Reactively

The next phase of semiconductor growth won’t be determined solely by policy outcomes—it will be defined by how companies choose to respond to this moment of inflection. The companies that lead from here will be those that invest in internal resilience, rethink how they approach talent and supply chains, and prepare to adapt faster than the competition.

While there is good reason to believe in a rebound, the companies that will thrive will be those willing to act now—before that rebound arrives—to secure their position in a more competitive market.

Tariffs and conditional CHIPS Act grants may change the playing field, but strategic, prepared companies will set the pace. This is a moment to recalibrate, strengthen internal capabilities, and lead—not just react to uncertainty.

Curious about how leading semiconductor teams are turning uncertainty into momentum?