American political instability leading to monthly “will they, won’t they” back and forth about tariffs, is looking to begin to affect the overall tech sector, potentially impacting the progress of AI advancements, upending data center operations, and semiconductor chips.
Semiconductors may be technically exempt, but tariffs on chip-adjacent goods such as servers, GPUs, and other products under different HTS codes still threaten up to 40% increases in AI hardware costs, slowing U.S. innovation in its most critical industry.
Adding to the squeeze are the new tariffs of 104% on China and 32% on Taiwan, two of the biggest players in the global electronics and semiconductor supply chain.
Four primary components affect different parts of the technology industry.
- Universal baseline tariff: A 10% tax on all imports, effective April 5, 2025.
- Reciprocal tariffs: These are country-specific rates calculated based on bilateral trade balances. For example, China faces a combined rate of 145%.
- Sector-specific levies: A 25% tax on steel and aluminum.
- Retaliatory adjustments: On April 11, 2025, the Trump administration announced exemptions for semiconductors and consumer hardware but maintained higher rates for most goods from China.
TSMC announced plans to expand U.S. manufacturing, as have Intel and Samsung. Proposed plants are set to be in Arizona, Texas, and Ohio, but these facilities won't be operational for several years.
Several tech companies fall into the crosshairs of these measures. The biggest names include Amazon, Apple, Intel, Microsoft, NVIDIA, and Samsung.
For U.S. tech firms looking to sidestep the effect of tariffs and future-proof their infrastructure, homegrown innovation is crucial, believes JB Baker, vice president of products at ScaleFlux.
Baker is a successful technology business leader with a more than 20-year track record of driving top and bottom-line growth through new products for enterprise and data center storage.
ScaleFlux is a leading innovator in data storage solutions, redefining SSD technology with intelligent storage capabilities that enhance performance, extend endurance, and optimize efficiency for data-intensive applications.
What risks do tech companies face when heavily reliant on overseas manufacturing for key components?
Over-reliance on one given “supplier,” be that a specific vendor, geographic region, material, or technology, does expose tech companies to constraints on their ability to meet market demand for their products. The supply chain disruptions experienced due to the COVID-19 outbreak certainly highlighted this risk. Other disruptions to the supply chain—geopolitical wrangling, natural disasters, or simply excursions in the manufacturing processes—can also have significant impacts on tech companies. Ensuring supply chain stability and resiliency is a key focus for operations and procurement teams.
What strategies and technologies should tech firms adopt to mitigate reliance on high-cost components in AI and data center operations?
With GPUs, memory, storage, and networking components all crucial to AI infrastructure build-outs, tech firms can’t eliminate reliance on these components. They can, however, carefully architect their deployments to achieve higher utilization rates and efficiencies from their infrastructure—getting more work done per GPU, per petabyte of storage, per terabyte of memory, per watt of electricity, etc. Selecting components that contribute to efficiencies at the system, cluster, and data center levels contributes to decoupling the scaling capacity to handle growing workloads from the scaling of hardware components.
How can U.S. tech firms be prepared to meet the demands of another semiconductor shortage by implementing scalable, reliable solutions?
Leveraging components that contribute to infrastructure efficiency, reliability, and sustainability can help mitigate short-term hiccups in the supply chain by extending the useful life and output of both new systems and existing installations.
In what ways does ScaleFlux’s collaboration with ecosystem partners redefine the semiconductor development process? How can ScaleFlux help companies weather this storm?
ScaleFlux products integrate technologies to enhance the performance, efficiency, and sustainability of not only the products themselves, but also the servers and systems that surround them.
What’s your prediction as to how this whole situation plays out and impacts the future?
The tech supply chain (both enterprise and consumer) is extremely complex, with development teams spread across the globe, with components and materials sourced from multiple geos, and with multi-stage assembly across locations, making navigation of changing trade rules a nightmare for operations teams. Even as trade negotiations resolve, tech vendors throughout the supply chain will likely be looking to implement protection from another disruption in the form of new partnerships and new investments in geographic diversity for the supply chain.