The US President’s imposition of tariffs will affect US companies that import components of their multinational supply chain and finished goods to America, as well as the price of products from foreign suppliers imported to the US, writes the resource Blocks& Files. The trade war will also affect US suppliers of storage systems that export to those countries that also increase tariffs in response. Thus, we can talk about three groups of companies that will face different problems after the tariff increase.
The US has imposed the highest tariff on China at 54%. And this is not the limit, since in connection with China’s decision to increase tariffs by 34% in response, the US, in turn, may increase the rate to 104%, writes The Register. China is followed by Cambodia with a tariff of 49%, Laos – 48%, Vietnam – 46%, Thailand – 37%, Indonesia and Taiwan – 32% each, India – 27%, South Korea – 26%, Japan – 24%, the European Union – 18.5%, the Philippines – 18%.
Among companies that supply goods to the U.S., the tariffs could affect suppliers of DRAM, NAND, SSD, tape and tape drives, as well as those that make storage controllers and server processors. It should be noted that under Annex II of the Harmonized Tariff Schedule of the United States (HTSUS), semiconductor chips are exempt from tariffs, but not goods that contain them as components.
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Micron makes DRAM, NAND, and SSDs. DRAM is made in Boise, Idaho, as well as in Japan, Singapore, and Taiwan. The duty exemption may apply to DRAM and NAND chips, but not necessarily to SSDs containing NAND, as there is no specific exemption for them. The goods will be subject to the U.S. administration’s country-of-origin tariffs.
Samsung produces DRAM and NAND primarily in South Korea, but some NAND is made in China. SSD assembly is concentrated in South Korea, so they are likely to be subject to the 26% tariff. SK hynix produces DRAM, NAND, and SSD chips in South Korea, while its subsidiary Solidigm produces SSDs in China. This means its prices will be affected by the 54% tariff on SSDs from China and the 26% tariff on products from South Korea.
Kioxia, which makes NAND and SSDs in Japan, will be subject to a 24% duty on its products when imported into the U.S. SanDisk’s NAND is made in Japan (jointly with Kioxia), but some SSDs are manufactured in factories in China, which means a 54% duty will be imposed. This means that Kioxia, Samsung, and SK hynix SSDs may be cheaper than Sandisk SSDs, but Solidigm SSDs are not.
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Seagate HDD has a fairly complex and integrated international supply chain, including China, Thailand, Singapore and Malaysia. The company produces disk platters and some HDDs themselves (for example, Exos) in China, and motors, head drive units and hard drives of other series – in Thailand. In addition, platters and some other disks are assembled in Singapore and Malaysia. The new duties will apply to imports of disks into the United States and will depend on the country of origin. Such a sharp increase in prices due to duties could cause shock to customers, noted the resource Blocks& Files.
Western Digital assembles its drives in Malaysia and Thailand, and will therefore face tariffs of 24% and 36%, respectively. Toshiba’s hard drives are manufactured in China, the Philippines, and Japan, which means U.S. import tariffs of 54%, 18%, and 24%, respectively. Recordable Blu-ray and DVD discs are manufactured in China, India, Japan, and Taiwan, and will also be subject to tariffs depending on the country of manufacture.
IBM makes its tape drives, both proprietary and LTO, in Tucson, Arizona, so it would only be subject to tariffs on any foreign-made components it imports. Fujifilm makes its LTO drives in Bedford, Massachusetts, and Sony makes them in Japan, which means a 24 percent tariff on imports to the U.S. Fujifilm benefits from the tariffs, while Sony suffers.
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Storage controllers and server processors are mostly made by Intel, with some made by AMD. Intel has factories in Oregon (Hillsboro), Arizona (Chandler) and New Mexico (Rio Rancho). Assembly, testing and packaging facilities for CPUs are available in Israel, Malaysia, Vietnam, China and Costa Rica. Some products are manufactured at a factory in County Kildare (Ireland). AMD relies heavily on Taiwanese TSMC factories. However, both companies, as well as Arm chip makers, will not be affected by the tariffs. However, exports to China will be subject to a 34% tariff.
Storage arrays are mostly manufactured in the US, where all Dell, HPE and NetApp production facilities are located. But Hitachi Vantara manufactures its storage in Japan, so it will be subject to the 24% tariff. Lenovo storage systems are effectively OEM NetApp arrays, so it can avoid tariffs. Infinidat storage systems are manufactured at Arrow Electronics, which has a global supply chain with the US as its main hub. Infinidat does not say where exactly the arrays are manufactured.
Non-US storage suppliers to the US will face tariffs depending on their country of origin. To avoid this, companies can invest in US units, although for many in the current situation this may not be very practical. The third group of storage suppliers are US companies that export products, for example, to China, which in response is raising its own tariffs on imported goods from the US – from April 10 it will be 34%. One of the winners in this trade war, Blocks& Files named Huawei, which does not supply goods to the US.