US pushes 1:1 chip production rule to boost domestic manufacturing

The US is planning to push a new semiconductor production rule in a bid to cut reliance on import chip supplies and boost domestic production.

As reported by the Wall Street Journal, the Trump administration has urged chipmakers to adopt the 1:1 rule, producing the same volume of semiconductors domestically as their customers import from other countries.

The decision came on the heels of President Donald Trump's efforts to re-shore chip manufacturing companies by offering 100 percent exemptions on chips from tariffs for companies which would start production domestically.

In the case of failure to comply with the 1:1 domestic-to-import rule, firms will be slammed with tariffs.

According to US Commerce Secretary Howard Lutnick, the rule would be compulsory for economic security.

"America cannot be reliant on foreign imports for the semiconductor products that are essential for our national and economic security," the Wall Street Journal cited White House spokesperson Kush Desai as saying.

Under the proposal, a firm who will pledge to manufacture the chips domestically will not only receive credit for pledged volume but also be allowed to import without tariffs until the plant is finished.

As a result of Trump policy, several international and domestic firms have invested hundreds of billions of dollars in increasing US manufacturing capacity.