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U.S. chip trade balance narrowed to $3.8B through May 2026 from $5.6B a year ago, per USITC, as imports outgrew exports under new tariffs.

By Jack Caporal – Updated Jul 20, 2026 at 12:45 AM EST | Fact-checked by Frank Bass

Key Points

U.S. semiconductor trade surplus shrank in early 2026, despite rising imports and exports.
Taiwan replaced Malaysia as the top U.S. import source of chips by 2025.
Tariffs and export controls now critical in shaping semiconductor trade dynamics.

The U.S. semiconductor trade surplus narrowed to $3.8 billion in the first five months of 2026, down from $5.6 billion over the same period in 2025, according to the U.S. International Trade Commission, even as both imports and exports grew. Imports rose 29% year-over-year to $24.3 billion, faster than exports, which rose 15% to $28.1 billion, despite Section 232 tariffs on advanced semiconductors coming into effect.

U.S. semiconductor imports and exports with every country

The full-year trade balance narrowed in 2025 after two years of growth: it was $6.7 billion in 2021, $9.6 billion in 2022, $8.8 billion in 2023, $11.1 billion in 2024, then $10.2 billion in 2025.

The trading partners at the top of the import list have changed since 2021. Malaysia supplied $21.5 billion worth of chips that year, the largest single source. By 2025, Malaysia's figure had fallen to $11.2 billion, a decline of about 48%, and Taiwan, which supplied just $6.0 billion in 2021, had grown to $13.6 billion, more than doubling and overtaking Malaysia as the top source.

The largest export markets for U.S.-shipped semiconductors in 2025 were Mexico ($13.2 billion), China ($10.7 billion), Malaysia ($7.9 billion), Taiwan ($7.8 billion), and South Korea ($2.1 billion). China held the top spot in 2021 at $13.2 billion, with Mexico second at $12.5 billion.

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The largest export markets for U.S.-shipped semiconductors in 2025 were Mexico ($13.2 billion), China ($10.7 billion), Malaysia ($7.9 billion), Taiwan ($7.8 billion), and South Korea ($2.1 billion). That list order hasn't stayed the same: China held the top spot in 2021 at $13.2 billion, with Mexico second at $12.5 billion.

U.S. semiconductor chip sales by major market

U.S.-headquartered semiconductor companies earned 50.4% of global chip sales revenue in 2024, according to the Semiconductor Industry Association (SIA), holding the sales leadership position the industry has kept since the late 1990s. China accounted for 27.4% of global chip sales in 2025 and was the largest single market for semiconductor manufacturing equipment, at almost 37% of global equipment sales, per SIA's July 2026 comments to the U.S. Trade Representative.

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U.S. semiconductor trade with China

Semiconductor imports from China peaked at $3.5 billion in 2022 and have fallen to $1.7 billion in 2025, a decline of about 51%. Chip exports to China from the U.S. took a different path: they fell sharply in 2023 to $6.0 billion before recovering to $10.7 billion by 2025, as demand for chips not subject to U.S. export restrictions or Chinese regulations continued.

Washington remains divided over how restrictive chip export controls toward China should be. Proponents of tight restrictions argue they're necessary to preserve a U.S. technological edge; critics counter that the restrictions push China to accelerate its own domestic chip development rather than slow it.

China has moved on both fronts since 2025: the government directed local chipmakers in late 2025 to use at least 50% domestically made semiconductor manufacturing equipment when building or expanding production capacity. China's commerce ministry restricted critical mineral and rare earth exports to 20 Japanese companies in 2026 and placed 20 more on a watch list, actions that SIA says affect suppliers to the U.S. semiconductor industry, as well.

U.S. semiconductor trade with Malaysia

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Malaysia is a hub for semiconductor packaging, assembly, and testing for less advanced chips, and companies including Intel (INTC +3.58%) and GlobalFoundries (GFS -0.92%) operate there. The U.S. maintained a semiconductor trade surplus with Malaysia until 2011. Escalating U.S.-China trade tensions and export controls aimed at limiting China's access to advanced chips pushed companies to diversify supply chains away from China and toward Malaysia through the following decade.

That shift has since partly reversed. U.S. chip imports from Malaysia fell from $21.5 billion in 2021 to $11.2 billion in 2025 as Taiwan absorbed a growing share of the sourcing that once went to Malaysia.

U.S. semiconductor trade with Taiwan

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Taiwan's dominant position in global semiconductor trade rests on Taiwan Semiconductor Manufacturing Company (TSM +0.31%), the world’s most advanced and valuable semiconductor manufacturer.

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NYSE: TSM

Taiwan Semiconductor Manufacturing

Today's Change

(0.31%) $1.34

Current Price

$430.49

Key Data Points

Market Cap

$2.2T

Day's Range

$428.39 - $436.04

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$223.70 - $479.00

Volume

8.2M

Avg Vol

13.9M

Gross Margin

63.38%

Dividend Yield

0.81%

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TSMC builds chips for most fabless semiconductor companies, including Nvidia (NVDA +0.54%), Advanced Micro Devices (AMD +0.02%), and Apple (AAPL +1.00%). The Taiwanese company has made several commercial breakthroughs that solidified its irreplaceable position in global semiconductor supply chains, including being the first to mass-market 7-nanometer and 5-nanometer chips.

Taiwan's chip exports to the U.S. more than doubled between 2021 and 2025, from $6.0 billion to $13.6 billion, overtaking Malaysia as the largest single source of U.S. semiconductor imports.

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Semiconductor production capacity by country and segment

China is the world's leading producer of older-generation legacy semiconductors, sometimes called mature-node chips, which typically measure 28 nanometers or larger. China accounted for 33% of global mature-node production capacity in 2023, up from 19% in 2015, according to SIA data cited in a Bureau of Industry and Security report. Japan's share fell to 15% over the same period, down from 19%, and the U.S. share fell from 14% to 12%.

Mature-node semiconductors made up 80% of semiconductor shipment volume in 2023 and 40% of revenue, per the Semiconductor Industry Association.

The table below shows the market share and manufacturing capacity share of U.S. firms by mature-node semiconductor product segment and where U.S. companies source chips based on product segment and nanometer size.

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U.S. firms dominate the analog chip segment by market share, but domestic manufacturing capacity lags far behind that share, indicating heavy reliance on overseas fabs. A similar but smaller gap exists for discrete mature-node chips, such as individual diodes and transistors. Sensors, actuators, and logic chips show closer alignment between market share and domestic manufacturing capacity.

U.S. companies are more likely to rely on Chinese foundries specifically for analog, discrete, and optoelectronic chips smaller than 90 nanometers, according to a 2024 Bureau of Industry and Security survey, which cited existing capacity and cost as the main reasons for that reliance.

Semiconductor export controls and tariffs: What investors should watch

Semiconductor investors can no longer treat trade policy as background noise. Tariffs, export controls, and subsidies now influence where chips get made, who can buy them, and what they cost to produce, and those levers have moved fast over the past 18 months. This kind of state intervention is here to stay.

The Section 232 investigation that once loomed over chip imports concluded in January, resulting in a 25% tariff on select advanced semiconductors, effective the next day, with carve-outs for U.S. data centers, R&D, and other qualifying domestic use. That carve-out is now a real incentive for chipmakers building U.S. capacity: a Jan. 15, 2026, U.S.-Taiwan trade agreement exempts Taiwanese companies doing so from the tariff entirely. The Bureau of Industry and Security also tightened export license requirements for advanced chips shipped to China, tied to a revenue-sharing arrangement on approved AI chip sales there.

The friction carries a real cost. SIA estimates a 1-point duty increase on manufacturing inputs raises U.S. fab construction costs by 0.64%, and export licensing has slowed to an average of 76 days for low-risk destinations, more than double the 30-day statutory standard. For companies planning multi-year capacity or counting on export markets, that's real uncertainty priced into every roadmap.

China is treating trade policy as industrial strategy, not a byproduct of it, and the EU is now pushing to overhaul its own Chips Act into a larger, more centrally funded program. Every company in this supply chain now operates within a system that multiple governments are actively steering, and investors should expect this to shape costs and competitiveness for years, not quarters.

2026 trade data offers the first look at the fallout: Imports are absorbing cost and volume pressure faster than exports are growing, the opposite of what tariff supporters expected. Whether that gap keeps closing or reflects short-term front-loading is worth watching. Global semiconductor trade flows are being actively renegotiated, with terms that can shift again on any month's headlines.

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About the Author

Jack Caporal is the Research Director for The Motley Fool and Motley Fool Money. Jack leads efforts to identify and analyze trends shaping investing and personal financial decisions across the United States. His research has appeared in thousands of media outlets including Harvard Business Review, The New York Times, Bloomberg, and CNBC, and has been cited in congressional testimony. He previously covered business and economic trends as a reporter and policy analyst in Washington, D.C. He serves as Chair of the Trade Policy Committee at the World Trade Center in Denver, Colorado. He holds a B.A. degree in International Relations with a concentration in International Economics from Michigan State University.

TMFJackCap

Jack Caporal has positions in Advanced Micro Devices and Apple. The Motley Fool has positions in and recommends Advanced Micro Devices, Apple, GlobalFoundries, Intel, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

Semiconductor Trade Statistics: U.S. Imports, Exports, and End Uses

U.S. chip trade balance narrowed to $3.8B through May 2026 from $5.6B a year ago, per USITC, as imports outgrew exports under new tariffs.

Key Points

U.S. semiconductor imports and exports with every country