Higher tariffs could lead to increased prices for consumer goods reliant on semiconductors, impacting everything from smartphones to vehicles.

Industry leaders, including Nvidia, are expected to face negative impacts from these tariffs, despite their current profitability.

Chaudhuri also notes that chip production bottlenecks are a significant barrier to AI advancement, exacerbated by the COVID-19 pandemic.

The Biden administration has pledged $6.6 billion to help Taiwan Semiconductor Manufacturing Company expand its facilities in Arizona, further supporting domestic chip production.

The Biden administration's efforts also focus on reducing reliance on Asian suppliers, particularly in light of concerns about China's influence over Taiwan, which produces over 90% of advanced chips.

Chaudhuri emphasizes the surprising nature of Trump's stance against the CHIPS Act, which is designed to bolster chip manufacturing in the U.S. during a time of global supply chain disruptions.

The CHIPS and Science Act, introduced to address chip shortages, has allocated $30 billion for projects across 15 states, aiming to create 115,000 jobs and increase U.S. production of advanced chips to 30% of global output.

Enacted during the Biden administration, the CHIPS Act aims to boost domestic semiconductor production after pandemic-related supply disruptions raised economic concerns.

In a bid to encourage domestic manufacturing, Trump has proposed tariffs on foreign chip production, although experts warn this could hinder the U.S.'s competitiveness in artificial intelligence research.

Saikat Chaudhuri from U.C. Berkeley highlights that the pandemic-induced chip shortage has affected various sectors, including AI and automotive industries, necessitating efficient chip production.

Maintaining openness to global markets has historically supported American technological leadership, and closing off could harm future growth in the sector.

Restricting imports and ending the CHIPS Act would signal uncertainty for future investments in domestic chip manufacturing, adversely affecting the industry.