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NVIDIA CEO Jensen Huang is in Taiwan to discuss tariffs and transfer pricing concerns with TSMC. Huang made headlines earlier today when he gave a small talk to the media after lading in the island. The NVIDIA shared explained that he was in Taiwan to discuss NVIDIA's next-generation Rubin AI chip and discussed other topics such as Chinese concerns about the H20 GPU having security backdoors and his conversations with President Donald Trump as part of receiving the H20 AI GPU export license.
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In his talk with reporters, Huang outlined that he was in Taiwan to meet with TSMC executives since the firm's Vera Rubin AI GPUs have reached the tapeout phase at TSMC. A tapeout involves transferring a chip's design to the photomask before officially kicking off early-stage production to map out potential defects. NVIDIA's shares have lost 3.7% over the past five days as investors have rotated out of AI stocks.
However, according to a report from Taiwan's Economic Daily, the NVIDIA CEO is also in Taiwan to discuss the impact of tariffs on his firm's products and transfer pricing with TSMC's management. Transfer pricing is the price that a company charges to buy and sell products within itself to subsidiaries, and the practice is often used to lower a firm's tax burden.
The NVIDIA CEO's visit to Taiwan comes as rumors claim that the Trump administration is seeking to take equity stakes in TSMC. While reporting from the Wall Street Journal has denied the rumors, the shares nevertheless continued to see weak buyer interest in Taiwan. In his talk at the airport, Huang praised TSMC and called it the greatest company in the world when asked about TSMC's shares.
In its report, the UDN quotes an analyst as saying that the real reason behind Huang's visit to Taiwan is to discuss production capacity allocation globally, minimize tariffs for NVIDIA's products and discuss transfer pricing with TSMC's management. The transfer pricing issue is reportedly a problem for TSMC's side, with TSMC CEO Dr. C.C. Wei and Huang meeting to ensure the best outcome for both parties.
In global supply chains, transfer pricing refers to the price of goods that one business of a company charges another. It allows companies to lower their tax burden by shifting profits to regions with lower tax rates. TSMC's Arizona chip site is managed by its subsidiary TSMC Arizona, and potential transfer price discussion between Huang and Wei could include the Arizona subsidiary selling the chips to its parent company for NVIDIA to buy or vice versa.
It is likely that NVIDIA is able to avoid the brunt of the Trump administration's semiconductor tariffs due to its $500 billion US data center investment plan and some chip procurement from TSMC's Arizona plant. However, the majority of TSMC's production capacity - including that of leading-edge nodes such as 3-nanometer and 2-nanometer - is in Taiwan, making it unclear whether NVIDIA or TSMC might be caught in the middle of the tariff war.
About the author: Ramish is a seasoned technology writer and editor with more than a decade of experience. He specializes in semiconductor fabrication and market analysis. With a background in finance and supply chain management - via his bachelors in Finance and a micromasters in supply chain management from MIT - Ramish combines financial rigor with deep industry insight to deliver accurate and authoritative coverage.
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