Chris Caso, a senior analyst at Wolfe Research, discusses the potential for further restrictions on chipmaking equipment and AI technologies in a second Trump administration, emphasizing the unpredictability of policy changes and their limited impact on China’s semiconductor production. He also reflects on the CHIPS Act, acknowledging its role in diversifying production away from Taiwan while cautioning that government intervention can lead to unintended consequences in the semiconductor industry.
In a discussion about the potential implications of a second Trump administration on the chipmaking sector, Chris Caso, a senior analyst at Wolfe Research, highlights the unpredictability of policy changes. He notes that the landscape can shift rapidly, making it challenging to forecast outcomes. Caso identifies three primary areas of concern: further restrictions on equipment sold to China, limitations on artificial intelligence (AI) technologies, and potential changes to tariffs. He emphasizes that existing restrictions have already significantly impacted China’s production capabilities, and any additional measures may only result in minor adjustments rather than sweeping changes.
Caso elaborates on the restrictions related to chipmaking equipment, indicating that while there are already stringent limitations in place, more could be expected before the end of the year. He points out that China is already facing considerable challenges in its semiconductor production, and further restrictions may only serve to fine-tune existing policies rather than impose a complete halt. He also discusses the implications of AI restrictions, particularly concerning companies like NVIDIA, which have limited capacity to ship products to China. Caso suggests that additional restrictions could inadvertently benefit Chinese companies like Huawei, as they may fill the gap left by reduced shipments from U.S. firms.
On the topic of tariffs, Caso explains that the semiconductor supply chain is complex, with many chips being manufactured in Taiwan and then sent to China for assembly before reaching the U.S. This means that direct imports of semiconductors from China to the U.S. are relatively low, which could mitigate the impact of any tariff changes. Overall, he anticipates that any adjustments in policy will likely be minor and will not have a significant effect on the chip industry as a whole.
When asked about the CHIPS Act, Caso shares a mixed perspective. He acknowledges the necessity of diversifying semiconductor production away from Taiwan due to geopolitical concerns and believes the CHIPS Act has contributed to this goal. However, he also points out that the initial impetus for the Act was to address shortages in automotive semiconductors, and the current oversupply indicates that government intervention can sometimes lead to unintended consequences. He argues that the investments encouraged by the CHIPS Act would have likely occurred regardless, as companies like Apple were already aware of the need to diversify their supply chains.
Lastly, Caso reflects on the broader implications of industrial policy, noting that the effectiveness of such policies hinges on whether funds are allocated to the right companies for the right reasons. He mentions Intel as a company that appears to need support at this time, suggesting that the government’s financial assistance may be justified. The conversation concludes with a recognition of the complexities involved in industrial policy and the ongoing challenges faced by the semiconductor industry in navigating these dynamics.
