SEMICONDUCTORS, TARIFFS, AND GEOPOLITICS

I would like to thank Al Qahira News for hosting me live this morning to discuss one of the most strategic topics shaping the global technology landscape today: the U.S. decision to delay tariffs on Chinese semiconductors and its broader impact on markets, innovation, and geopolitics.

Semiconductors are now the backbone of the modern economy. They power smartphones, electric vehicles, artificial intelligence, payment systems, and critical defense infrastructure. The global semiconductor market has reached an estimated value of $630 billion, making any policy decision in this sector immediately systemic.

Although the United States imports less than 3% of its semiconductors directly from China, the interdependence between the two countries remains significant. China controls approximately 80% to 90% of the global refining and processing of rare earth minerals, which are essential inputs not only for semiconductors, but also for batteries, aerospace, automotive manufacturing, and military technologies. This structural dependency explains why tariff decisions cannot be treated as simple trade measures.

The U.S. decision to postpone tariffs until 2027 provides critical visibility to financial markets and industrial players. An immediate implementation could have triggered sharp market corrections, particularly for major technology companies such as Nvidia, Apple, Tesla, and AI-focused firms whose valuations rely heavily on stable and predictable supply chains. At a time when the AI market was already showing signs of overheating, such a shock could have amplified volatility.

From an industrial standpoint, the delay offers a strategic window of 18 to 24 months for companies to adapt. While the United States has initiated the reshaping of semiconductor supply chains, it still produces only about 10% to 12% of its domestic needs. Today, more than 90% of advanced chips are sourced from TSMC in Taiwan, making the industry highly sensitive to geopolitical tensions in the region.

Tariffs, in this context, function less as immediate sanctions and more as long-term policy instruments. Their objective is to encourage reshoring or nearshoring of semiconductor manufacturing to the United States, Latin America, or allied regions. However, such transformations require time, capital, and technological maturity — none of which can be accelerated abruptly without systemic risk.

Another key vulnerability discussed during the interview concerns rare earth minerals. China’s dominance in mining, refining, and processing gives it significant strategic leverage. Delaying tariffs allows the U.S. to secure alternative supply routes and diversify sourcing before engaging in more confrontational trade policies.

Beyond artificial intelligence, semiconductors are also critical to global payment systems. Secure Elements embedded in payment cards and smartphones operate under EMV standards (Europay, Mastercard, Visa) and rely on highly secure chip technologies. While these chips differ from AI processors, they are essential to financial stability and digital trust. Europe, and particularly France, remains a global leader in this segment through specialized secure-chip manufacturers.

Finally, semiconductor dependency extends to Bitcoin mining and high-performance computing, where China continues to play a central role through manufacturing capacity and access to critical materials. This reinforces a fundamental reality: despite geopolitical rivalry, the global technology ecosystem remains deeply interconnected.

The decision to delay tariffs reflects a pragmatic approach. It prioritizes market stability, technological continuity, and strategic adaptation over abrupt confrontation. In today’s world, innovation, geopolitics, and financial markets are no longer separable — they must be managed together.