There's no doubt that TSMC is experiencing its run with the AI chip markets, primarily due to the massive demand, but US chip tariffs could have devastating effects.
TSMC Could End Up Under President Trump's Chip Tariff, Which Will Compromise Operations Massively
Well, when you look at the Taiwan giant's progress in recent years, it has been nothing short of exceptional, especially when it comes to catering to market demand. From chips to advanced packaging, TSMC has been a significant beneficiary of the demand coming from the AI markets, but this "gold rush" could see a massive hit if the Trump administration decides to impose chip tariffs on Taiwan, and by the looks of it, the chances of it happening are pretty high for now.
President Trump has been voicing support for imposing chip tariffs on Taiwan in his election campaign, claiming that the nation stole chip technology from America. However, one of the major reasons TSMC has been heavily investing in the U.S. is to essentially avoid these tariffs since President Trump is more inclined to give relaxation to companies that decide to produce in the nation. The Taiwan giant has announced over $100 billion in investments in America, which would build new chip and advanced packaging facilities, allowing the U.S. to be a secondary base, after Taiwan.
However, in a statement by Commerce Secretary Howard Lutnick, when quoting about pharmaceutical tariffs, he claimed that the decision is up to President Trump. Here's what the stance of the administration is generally going to be on chip tariffs as well, although this particular statement was said in the context of the pharma industry.
And so the president will then set his policies. And I'm going to let him wait to decide how he's going to do it. He said, if you don't build in America, they're going to be a high rate. But he may consider that if you're building in America, to give you the time to build … and then the tariff will be much higher.
For TSMC and Taiwan, there will be a relaxed stance, and the tariff rate might be phenomenally lower than what President Trump has been saying to impose in the past, which was up to 100%. However, given the supply chain complexities, a tariff of even 10% would hurt TSMC's operations massively, since the firm does rely on Taiwan for cutting-edge nodes. And not just TSMC, but customers like Apple, NVIDIA, and others would likely need to absorb the price shock by compromising their margins or raising consumer product prices.
As far as when chip tariffs could hit the markets, the administration is formally planning to introduce them before the August 1st deadline, so in a few weeks. It would be interesting to see how the decision turns out for TSMC and its partners.
About the author: Muhammad Zuhair is a hardware and technology reporter for Wccftech, specializing in the semiconductor industry and the complex interplay between technology, manufacturing, and geopolitics. His coverage focuses on the corporate strategies and technological roadmaps of industry giants like TSMC, NVIDIA, Samsung, and Intel. Zuhair's expertise lies in deconstructing complex topics such as fabrication nodes (e.g., 2nm process), the economic impact of policies like the CHIPS Act, and the strategic development of AI infrastructure from NVIDIA, AMD and Intel.
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