U.S. Imposes 50% Tariff on Copper, Semiconductor Industry on High Alert

The United States has decided to impose a 50% tariff on copper starting August 1, putting the global semiconductor industry on high alert. Copper is a key material for high-performance semiconductors, electric vehicles, and traditional industries such as wiring. The surge in copper prices is directly impacting the global semiconductor supply chain and manufacturing costs. Additional tariffs on semiconductors are expected to be introduced by the end of this month, escalating tensions.

Industry insiders revealed on the 13th that South Korea's domestic semiconductor industry is planning tariff policy solutions and countermeasures. Finished semiconductor chips will not be subject to tariffs, but critical components required for chip production (such as copper wire) will be included in the tariff scope. This is likely to indirectly lead to an increase in semiconductor manufacturing costs.

Semiconductor industry experts stated, “The U.S. tariff on copper does not directly affect semiconductors themselves, but it will lead to a sharp increase in the cost of key materials, which will have a practical impact on semiconductor manufacturing.” They added, “The impact will be greater for high-performance semiconductors that use large amounts of copper.”

Traditionally, copper is widely used in electric vehicles, batteries, and wiring, but it is also crucial in semiconductor packaging, substrate design, and high-speed data transmission lines. As demand for advanced AI chips and high-performance GPUs increases for finer and more complex wiring structures, the use of copper is rising.

This situation is equally unwelcome for the U.S. semiconductor industry. Companies like Intel and Micron, which are aggressively expanding production in the U.S., are facing unexpected “raw material inflation.” If the copper tariff is implemented, import prices will rise nearly 1.5 times.

The Semiconductor Industry Association (SIA) expressed concern, stating, “Contrary to the intention of protecting domestic industries, domestic chip production costs may rise rapidly, weakening global competitiveness.”

The issue is that the tariff policy for finished semiconductors has yet to be introduced. President Trump stated during a cabinet meeting at the White House on the 8th that, “We will announce tariffs on certain products like pharmaceuticals and semiconductors.” Although President Trump did not disclose specific tariff rates, announcement times, or implementation dates, Secretary of Commerce Howard Rutnik indicated after the cabinet meeting that the plan is to complete the investigation into semiconductors by the end of this month.

This tariff policy is interpreted as an attempt to ensure tax revenue and curb China's rise in the semiconductor industry, placing the entire semiconductor supply chain under the U.S.

The U.S. continues to pressure global semiconductor companies like TSMC, Samsung Electronics, and SK Hynix through tariff policies, demanding they establish production bases and invest in the U.S.

In particular, the U.S. domestic memory industry is expected to face pressure. Samsung Electronics is building a foundry in Taylor, Texas, while SK Hynix is preparing to establish a semiconductor packaging production base in Lafayette, Indiana. These two companies do not have memory production facilities in the U.S. If tariffs on semiconductors are imposed in the U.S., they will be able to establish memory production facilities.

However, some observers believe that imposing high tariffs on semiconductors in the U.S. is not an easy task. This is because countries and regions like South Korea and Taiwan dominate a large portion of the global semiconductor market, and excessive tariffs could actually drive up the prices of U.S. companies' products.

Senior researcher Kim Yang-pyeong from the Korea Industrial Research Institute cautiously predicts, “Given that Trump has mentioned semiconductors again, the likelihood of not imposing tariffs on semiconductors is high,” but also states, “The possibility of imposing high tariffs like those on copper is low.”

He analyzes, “For other products mentioned for tariffs, the U.S. has production or alternatives, but there are not many alternatives for semiconductors. Just like with iPhone tariffs, the U.S. cannot take forceful actions in areas that harm its own interests.”

Chips May Face Disruption from Copper Supply Issues

PricewaterhouseCoopers (PwC) recently reported that by 2035, about 32% of global semiconductor production may be affected by climate change-related copper supply disruptions, a figure that is four times the current level.

Chile, the world's largest copper producer, is already dealing with water shortages, which is slowing copper production. PwC states that by 2035, most of the 17 countries supplying copper to the chip industry will face drought risks.

The last global chip shortage stemmed from a dual impact of pandemic-induced demand surges and factory shutdowns, which severely impacted the automotive industry and caused production lines in other chip-dependent industries to stall.

Glenn Borm, a project leader at PwC, cited U.S. Department of Commerce data, stating, “This led to a full 1% decline in U.S. GDP growth, while Germany experienced a 2.4% decline.”

PwC indicates that copper miners from countries such as China, Australia, Peru, Brazil, the U.S., the Democratic Republic of Congo, Mexico, Zambia, and Mongolia will also be affected, and all chip manufacturing regions globally cannot avoid this risk.

Copper is used to make billions of tiny wires in each chip circuit. Although research is ongoing into alternative materials, none can currently match copper in terms of price and performance.

PwC warns that if material innovations do not adapt to climate change, and affected countries fail to develop more stable water supply systems, this risk will continue to escalate over time.

The report states, “By 2050, about half of each country's copper supply will face risks—regardless of how quickly global carbon emissions are reduced.”

Chile and Peru have taken measures to secure water supplies, including improving mining efficiency and constructing desalination plants. PwC states that this approach is exemplary, but may not be a solution for countries unable to access large amounts of seawater.

PwC estimates that currently, 25% of Chile's copper production faces disruption risks, a figure that will rise to 75% within the next decade, reaching 90% to 100% by 2050.

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