tsmc weathers tariff storm: buy the dip?

2025-08-01 tsmc

taipei, Friday, 1 August 2025.
tsmc’s stock dipped 1.72% to NT$1140 following taiwan’s higher-than-expected 20% tariffs. president lai addressed the situation in a press conference, calling them ‘temporary’. despite the dip, analysts say tsmc’s fundamentals are strong. experts advise investors to hold steady, suggesting a buying opportunity if the stock dips below NT$1100. the tariffs have sparked discussions about potential impacts on export volumes. tsmc is exploring diversifying production to mitigate risks.

Tariff impact on tsmc

The imposed 20% tariff on Taiwanese goods by the U.S. has sparked concerns in the market, particularly for TSMC [4]. Wu Da-ren, CEO of the Taiwan Economic Research Center, anticipates that the tariffs will negatively affect exports and private investment [4]. This could potentially lead to increased unemployment in the latter half of the year [4]. The tariffs, which primarily target the semiconductor industry, stem from ongoing trade disputes [1]. TSMC, a dominant force in the semiconductor market, is projected to experience a significant impact [1].

Market reactions and expert opinions

Following the tariff announcement, the Taiwan stock market experienced a downturn on July 29, 2025, reflecting escalating tariff concerns [1]. However, the market showed resilience, closing up 80.8 points (0.34%) at 23542.52 points on July 31, 2025 [1]. Moore Investment Consulting analyst Zhuang Jia-ying suggests that as long as TSMC’s stock price remains above NT$1100, short-term opportunities may arise during intraday pullbacks [1]. She attributes the initial stock decline to ‘disappointing selling pressure’ [1].

Strategic moves and mitigation

In response to the tariffs, TSMC is considering diversifying its production locations to mitigate potential impacts [1]. A trade delegation from Taiwan is scheduled to visit Washington D.C. on August 15, 2025, to engage in discussions regarding the tariffs [4]. Simultaneously, the U.S. and South Korea reached a trade agreement where the U.S. will impose a 15% tariff on South Korean goods [3]. South Korea will invest $350 billion in the U.S. and purchase $100 billion in U.S. energy products [3].

Semiconductor equipment tariff exemptions

A recent trade agreement between the U.S. and the European Union provides tariff exemptions for semiconductor manufacturing equipment [7]. This includes advanced machinery from ASML, a Dutch company, which is crucial for chip production [7]. Had the U.S. imposed a 15% tariff on ASML’s DUV and EUV lithography equipment, it would have significantly increased costs for chipmakers like Intel, TSMC, and Samsung [7]. Estimates suggest that each DUV equipment would have increased by $13 million, and each EUV by $40 million [7].

Taiwan’s negotiation position

Financial expert Huang Shih-tsung suggests that Taiwan may need to make concessions to secure lower tariffs [2]. These concessions could include opening its markets, particularly for agricultural products like rice and U.S. pork [2]. Former President Trump’s trade policies, implemented between 2018 and 2020, significantly impacted the market [6]. Tariffs imposed by the U.S. on Chinese goods during the Trump administration reached as high as 25% on certain products [6].

Bronnen

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