A significant increase in medical device costs will hit consumers and healthcare systems in the US if President Donald Trump goes ahead with a focused tariff on semiconductors, according to market analysts.
Trump is set to announce the tariff rate on semiconductors soon, after revealing last week that the technology 鈥� along with a host of other electronics 鈥� would be part of a unique tariff bucket. The 10% across-the-board tariff has already destabilised global trade channels and hit medtech share prices, with the further semiconductor rate set to increase market volatility.
鈥淚f Trump鈥檚 tariffs impact semiconductor imports, companies can expect an increase in cost when sourcing semiconductors and chipsets for medical devices, even if final assembly occurs in the US,鈥� says GlobalData medical analyst David Beauchamp.
鈥淭hese price increases are likely to be passed on to consumers and healthcare systems. Domestic semiconductor production currently lacks the capacity to meet industry demand, making supply chain disruptions inevitable.鈥�
GlobalData estimates that around half of all medical devices use semiconductors. For example, in diabetes devices, they are used in sensors to measure glucose levels and transmitting components to communicate with insulin pumps.
As with other countries, the US is reliant on Taiwan for semiconductor supply. Over 90% of the world鈥檚 most advanced chips are made in Taiwan, a country that currently has a 32% tariff applied on all goods exported to the US. The result of a further trade hurdle placed on their import would likely lead to a significant price increase in medical device costs for consumers and healthcare systems in the US.
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By GlobalData鈥淭he semiconductor industry, which is a vital part of the supply chain for a large percentage of medical devices, is very likely to be affected by the Trump administration鈥檚 blanket tariffs,鈥� says Beauchamp. 鈥淓ven with facilities built in the US, it is highly unlikely that domestic manufacturing of these vital components will be able to meet the demands of the medical device industry, let alone the numerous other industries that rely on semiconductors.鈥�
Taiwan Semiconductor Manufacturing Company (TSMC), the world鈥檚 largest contract chipmaker, reported a revenue increase of 42% earlier this month. Sales for the company, for whom medical devices make up just a small portion of its export portfolio, reached $25.5bn. It is unclear how their 2025 guidance will be impacted by the impending tariffs given the rate of any levy is still unknown.
GlobalData says it 鈥渞emains to be seen鈥� if the current compound annual growth rate (CAGR) of 4.9% of the medical device market in the US will be slowed by a semiconductor tariff. Investment into medtech has decelerated as a result of Trump鈥檚 trade war, with investors wary of an unstable funding environment.
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