By coinnews 
00:00 Speaker A
I’m looking Gil here, the SMH, the ETF that tracks the chips. It gets, it’s down about 9% in today’s trade Gil, so it gets slammed. How are you thinking Gil about what these Trump tariffs do mean broadly for the chips? At least near to intermediate term. How you thinking through it?
00:41 Gil
Yeah, there’s several levels of impact. What we already know there’s going to be broad 10% tariffs on everything. So, I think saying that there’s going to be 10% price increases across the board or cost increases across the board is fair. Not a coincidence that stocks were down that much. But then there’s the next level effect. So, the next one is the reason semiconductors were excluded from the reciprocal tariffs wasn’t that we’re not going to tax them. It was that there’s going to be specific regime for regulating and tariffs around semiconductors that we don’t know about yet. So, we will learn about it. It is very likely to include China and restrictions on China. So, we will find out about those and those will probably make it even worse. And then the next order effect is what this is, what an overall slowdown in the economy is going to do to demand. Let’s not forget that when Microsoft, Google, Amazon, and Meta embarked on this journey to do this huge build out of data centers, their core businesses were doing very well and generating a tremendous amount of cash and they were willing to make this speculative bet that AI is going to generate fantastic returns in the next several years. If the global economy weakens, demand weakens, their core products have less cash to produce, they’re less likely to want to be on an aggressive path towards building data centers that are only going to pay off many years in the future. And that is going to have an impact on the semiconductor space as well. So, I think those are the levels of thinking that we need to have right now as we find out what’s next.
04:20 Speaker A
So it’s the data center side Gil. But then are you also saying, just to make sure I’m understanding you right, that we also have to be concerned about all the products that chips go into on the consumer side too. Smartphones, PCs, autos, because they are getting tariffs. So, as those prices get up, we have to be watchful for demand destruction there?
04:54 Gil
Yeah, absolutely. So, there’s the 10% across the board tariffs, but when we’re importing iPhones from China, the tariffs on those are going to be far higher. Any consumer electronics that we’re importing from anywhere, which often does come from China, those tariffs are going to be very significant and make, put the, the manufacturers and the brands in a tough spot of either absorbing the tariffs or raising prices very substantially, which will have a, one way or another, have a dampening effect on demand.