Testimony:
Bureau of Industry and Security (BIS)

Comments on Section 232 National Security Investigation of Imports of Semiconductors and Semiconductor Manufacturing Equipment

(Arlington, Virginia, May 7, 2025)

Written Testimony. See attachment for full text.

Introduction

The US-Taiwan Business Council (USTBC) thanks the Bureau of Industry and Security for this opportunity to comment on the Section 232 National Security Investigation of Imports of Semiconductors and Semiconductor Manufacturing Equipment. It is our understanding that BIS seeks to better understand the potential effects of U.S. imports of semiconductors and semiconductor manufacturing equipment (SME) and their derivative products on U.S. national security.

We note that the Bureau of Industry and Security is also conducting a “Section 232 National Security Investigation of Imports of Processed Critical Minerals and Derivative Products” (BIS-2025-0025 | XRIN 0694-XC124). The scope of the Executive Order instructing BIS to initiate that Section 232 investigation also covers semiconductor fab inputs, finished semiconductors, and electronics. USTBC asks that BIS try to ensure consistency and prevent contradictory policy outcomes between the two investigations.

USTBC is a member-based organization that has worked since 1976 to foster bilateral trade and business relations with Taiwan and to support U.S. companies on the island. Taiwan is a top tier trading partner for the United States and a like-minded democracy, and Taiwan also plays a crucial role in the global technology supply chain – particularly when it comes to leading-edge semiconductors. USTBC offers these comments on behalf of our member companies doing business in both the United States and Taiwan.

Selected Comments

This section of the testimony covers several priority areas in fourteen questions. Please see the attachment for the full text.

Question viii

“The feasibility of increasing domestic semiconductors capacity (in different product types and node sizes) to reduce import reliance, and similarly the feasibility of increasing domestic SME capacity to reduce import reliance.”

It is important to differentiate between inputs for which the United States can develop its own domestic sources and inputs for which it cannot. The bottom line is, however, that it is absolutely feasible to produce advanced semiconductors in the United States to reduce import reliance.

While moving production from overseas to the U.S. is extremely challenging, time consuming, and pricey, the U.S. has already made tremendous progress in onshoring advanced semiconductor manufacturing. According to a Semiconductor Industry Association report, since President Trump’s first term there have been over 100 new semiconductor initiatives introduced in 28 U.S. states, for over US$540 billion in private investments. These initiatives will create and support over 500,000 U.S. jobs, with the U.S. in the process of tripling its chip manufacturing by 2032 and capturing a meaningful share of global advanced chip production. Pro-growth policies such as tax incentives and further reduction of regulatory barriers could help sustain these investments.

Question ix

“The impact of current trade and other policies on domestic semiconductor and SME production and capacity, and whether additional measures, including tariffs or quotas, are necessary to protect national security.”

Additional measures such as tariffs or quotas are not necessary. We would instead encourage tariff exemptions for all projects deemed critical to national security. Any new import barriers would disrupt the ongoing investments by companies already committed to onshoring U.S. semiconductor production. Other measures, such as incentives and a reduction in regulatory barriers, would offer a more positive way forward.

New import restrictions and their accompanying costs increases, along with market uncertainty, would undermine the ability of companies to fully execute their ambitious onshoring plans, slow the deployment of leading-edge semiconductor manufacturing in the United States, and reduce the productivity and competitiveness of U.S. fabrication plants. For example, industry estimates are that the Liberation Day tariffs proposals could increase capex costs between 5-25% depending on the company. Indeed, current import restrictions serve as an anticompetitive government regulation that has pushed key technology partners to deepen their ties with Chinese firms as a hedge against U.S. uncertainty.

At a minimum, any new tariffs or quotas should offer flexibility and provide realistic adjustment times for U.S. businesses and investors who have already committed to expanding U.S. semiconductor production.

Question xiii

“Where the U.S. workforce faces a talent gap in production of semiconductors, SME or SME components.”

Access to talent is the most significant issue that our member companies contend with. Current critical workforce requirements in the United States concentrates in two areas: skilled technicians and specialty professionals.

Skilled technicians support semiconductor manufacturing in numerous ways, including as clean-room technicians, related facility operations personnel, and factory automation and logistics specialists. These jobs require vocational school courses, apprenticeships, or informal on-the-job training and life-long learning. There is an exceedingly high demand for these types of workers, as they represent skills critical to all advanced manufacturing across industries – including automotive, pharmaceutical manufacturing, and even automated warehouse logistics.

Specialty professionals have professional manufacturing skills in areas such as quality control, yield optimization, failure analysis, and process development. These jobs require 4-year and advanced degrees in engineering, materials sciences, chemical engineering, and automation/robotics – areas where experience is paramount and highly valued. U.S. universities are developing curricula in semiconductor manufacturing to train these types of workers, but the workforce requirements remain enormous, especially for those who are U.S. citizens.

Conclusion

The U.S. must maintain a leadership role in this critical industry for both economic and national security reasons. The reshoring of manufacturing capabilities for semiconductors is progressing well. However, it will require a sustained investment of time and capital, alongside a foreseeable and coherent regulatory regime – particularly with respect to export controls, tariffs, and related trade policies – to ensure long-term viability and strategic resilience for the U.S. semiconductor industry.

In examining potential impacts of the U.S. reliance on semiconductor imports, it is important to differentiate between advanced node chips and legacy chips. It is also crucial to avoid undercutting semiconductor manufacturing with policies that reduce demand for end market products.

Many semiconductor manufacturers have already made long-term, capital-intensive commitments in the United States based on existing U.S. policy frameworks. Large-scale investments require that companies can rely on stable and predictable government actions and regulations. To secure these strategic semiconductor investments, thereby strengthening national competitiveness, it is critical that the United States maintain consistent, forward-looking policies that do not undermine the progress already made. We encourage the U.S. to focus on permitting reform, removing regulatory barriers that throttle growth and innovation, as well as on the removal of trade and export barriers for U.S. made products around the world.

The U.S. is grappling with how to balance the economic benefits of global trade with the need to protect national security and economic interests. Policies aimed at reducing reliance on imported semiconductors could lead to higher costs for both U.S. companies and consumers. International cooperation with allies such as Taiwan to address these challenges would help ensure a secure and resilient global semiconductor supply chain. We need sustained, positive U.S. government support of the semiconductor sector to facilitate innovation, provide opportunities for high-paying jobs in the United States, and support the development of the next-generation products and technologies that underpin our national security.