tsmc weathers nvidia boost amid tariff concerns

2025-02-27 tsmc

Taipei, Thursday, 27 February 2025.
Despite nvidia’s impressive earnings, tsmc’s stock took an unexpected hit in Taipei, closing at nt$1040, a decrease of nt$20. This decline is fueled by investor anxiety over potential tariffs from the former U.S. president. The report indicates nearly 25,000 sell orders flooded in near the close of trading. The worries about tariffs overshadowed positive momentum from nvidia’s performance. The situation highlights the sensitivity of tsmc’s stock to geopolitical factors, even when key customers like nvidia report stellar results. This could signal broader market concerns about trade and global chip supply chains.

tariff threats overshadow tsmc’s adr gains

While tsmc’s american depositary receipts (adr) experienced a 2.77% increase, concluding a six-day losing streak, the shadow of potential tariffs continues to loom [1]. The stock initially climbed to nt$1065 before reversing course, ultimately closing at nt$1040, a -2.347 or -1.89% decrease [1]. This decline resulted in tsmc breaching its weekly (nt$1065), monthly (nt$1089.75), and quarterly (nt$1079.1) lines, also pushing its market value below the nt$27 trillion mark [1]. The taipei stock market also felt the impact, falling 349 points to close at 23053 [1].

trump’s tariff proposals rattle investors

Former U.S. President Donald Trump’s proposal to impose tariffs on semiconductors, along with automobiles and pharmaceuticals, starting in April 2025, has stirred unease [4][9]. The proposed tariff rate is 25%, with potential for further increases [9]. This policy shift could compel U.S. fabless companies and integrated device manufacturers (idms) to bear the brunt of increased production costs from tsmc, given the limited availability of alternative suppliers [9]. The tariffs are part of a broader strategy that aims to bring chip production back to the United States [8].

expert perspectives on tariff impacts

Wayne Lin from Witology Markettrend Research Institute suggests that the tariff pressure might expedite the relocation of taiwanese chip production to the u.s. [4]. However, dan hutcheson, a senior research fellow at techinsights, cautions against a complete transfer, stating that taiwan risks losing its strategic importance if it relinquishes its manufacturing dominance [4]. Robyn Klingler-Vidra, an innovation policy expert at king’s college london, believes that a 25% tariff, while significant, is unlikely to drastically alter taiwan’s semiconductor industry, at least in the short term [4].

tsmc’s strategic response and market position

Tsmc has committed to investing over us$65 billion in three arizona-based factories, signaling a move to expand its manufacturing footprint within the united states [4]. Despite geopolitical pressures, tsmc remains the world’s leading semiconductor foundry, servicing a diverse clientele including tech giants, automotive companies, and emerging startups [2]. While nvidia is a key customer, tsmc’s client base extends across various sectors, highlighting its significance in the global semiconductor supply chain [2]. Darson Chiu, an economics professor at tunghai university, notes that tsmc’s chips are not easily replaceable, even for companies like intel [8].

broader industry trends and tsmc’s role

The semiconductor industry is currently navigating a complex landscape of geopolitical tensions, trade restrictions, and high demand [7][8]. A recent earthquake in taiwan caused disruptions in tsmc’s production, leading to estimated losses of approximately nt$5.3 billion, net of insurance claims [7]. Despite these challenges, the semiconductor industry experienced 19% growth in 2024, and deloitte forecasts a potential market size of $697 billion in 2025, driven primarily by ai chip demand [7]. This growth underscores the critical role of tsmc in meeting the escalating global demand for advanced semiconductors [3][7].

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