tsmc faces potential 100% tariff as trump escalates trade war

2025-08-07 tsmc

Taipei, Thursday, 7 August 2025.
TSMC’s business model is now under threat as reports emerge about potential 100% tariffs on imported chips. This move is coupled with news of a possible forced acquisition of a 49% stake in Intel. The tariffs, considered a coercive tactic, stand in stark contrast to the CHIPS Act’s incentives. Investors now face uncertainty about TSMC’s revenue and competitiveness in crucial markets. Adding to the turmoil, TSMC is grappling with a recent leak of its 2nm chip technology, potentially implicating Japanese entities.

Tariffs as a coercive measure

President Trump’s proposed 100% tariffs on imported semiconductors aim to rapidly bring chip manufacturing back to the U.S [1]. This approach is seen as more forceful than the incentives provided by the CHIPS Act [1]. These tariffs could compel chip companies to shift production to American soil if they wish to retain access to the U.S. market [1]. The core of the chip industry, chip design, remains largely in the hands of U.S. companies like Nvidia [1]. Production, processing, and packaging are spread across Europe’s ASML, South Korea’s Samsung, and TSMC [1].

Forced acquisition of intel

The Trump administration is using tariffs to pressure TSMC into acquiring a substantial stake in Intel [2]. TSMC might be required to jointly acquire up to 49% of Intel to secure reduced tariffs [2]. Intel has been struggling, reporting losses for five consecutive quarters since the third quarter of 2024, accompanied by a significant drop in stock price [2]. Intel’s technological challenges include lagging process technology, missing the mobile chip market, and insufficient AI investment [2]. Rumors of TSMC acquiring Intel have circulated before, but TSMC has denied interest in such a move [2].

TSMC’s stock reaction

News of potential tariffs and the Intel acquisition proposal has already impacted TSMC’s stock [1]. Shares in Asian chipmakers with significant U.S. investment plans, including TSMC, saw gains [4]. TSMC’s stock rose by 4.4% following the announcements [4]. Market analysts believe that TSMC, with its existing plans to build facilities in the U.S., could benefit from the tariff exemptions [5]. However, concerns linger about the overall impact on the semiconductor supply chain and potential decline in U.S. demand [5].

Geopolitical implications and expert views

These tariffs and forced acquisition attempts are viewed as a strategy to strengthen U.S. control over the semiconductor industry [1]. Some experts believe that only large, cash-rich companies capable of building in America will thrive [4]. Others suggest that the significant investment in U.S. chip production may exempt much of the sector from the tariffs [4]. The Philippine semiconductor industry president described the tariffs as ‘devastating’ for his country [4]. Malaysia’s trade minister warned of losing market share in the U.S. due to reduced competitiveness [4].

Trade secret theft

Adding to TSMC’s challenges, three employees were detained for allegedly stealing trade secrets related to the 2nm process [7]. Taiwan’s High Prosecutors Office is investigating the motives behind the theft to safeguard Taiwan’s high-tech industry [7]. TSMC detected unusual file access by current employees, leading to an internal investigation and subsequent legal action [7]. The company has emphasized a zero-tolerance policy towards actions that compromise trade secrets and harm company interests [7]. The 2nm chip production is among the most advanced manufacturing processes in the semiconductor industry [7].

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