taiwan's chip titans face us policy headwinds
Taipei, Tuesday, 8 April 2025.
taiwan’s semiconductor industry, dominated by tsmc, confronts increasing pressure from u.s. industrial policy and export controls. these measures, designed to limit china’s technological advancement, also curtail taiwan’s economic autonomy. one expert ominously described the u.s. approach as ‘contaminating’ any technology it touches, thereby extending u.s. jurisdiction across international supply chains. the impact on tsmc, which controls over 90% of advanced semiconductor manufacturing, will depend on key technological, political, and security indicators. the situation forces taiwan to balance u.s. security guarantees against the benefits of closer integration with china.
Export control impacts
Recent U.S. export controls grant the United States increasing leverage over Taiwanese businesses, especially TSMC [1]. These controls, expanded in December 2024 to include high-bandwidth memory (HBM) chips and lower Foreign Direct Product Rule (FDPR) thresholds, directly affect TSMC’s operational flexibility [1]. The January 2025 “AI Diffusion Rule” further categorizes countries, restricting chip access based on their alignment with U.S. interests [1]. These measures collectively impact TSMC’s ability to serve its global customer base and maintain its market leadership [1].
Geopolitical risks and tsmc
Taiwan is strategically balancing security assurances from the U.S. against economic opportunities arising from greater integration with China [1]. However, TSMC faces potential threats, as Chinese targeting of TSMC or other firms in the sector could signal a shift in regional dynamics [1]. A threat by Trump to impose tariffs on all Taiwanese semiconductors suggests bipartisan support for Taiwan might not be guaranteed [1]. The U.S. Commerce Secretary is currently encouraging investment in the U.S., reflecting a broader strategy to onshore semiconductor manufacturing [8].
Manufacturing capacity adjustments
TSMC’s fabs in China operate several generations behind its most advanced designs, having received U.S. permission for continued exports [1]. The TSIA held a seminar on 2025/03/27, focusing on the impact of new policies on the semiconductor industry’s export controls and taxation [2]. TSMC’s Senior Vice President, Hou Yongqing, was re-elected as the 15th Chairman of TSIA on 2025/03/28 [2]. These developments suggest TSMC is actively engaging with industry stakeholders to navigate the evolving regulatory landscape and optimize its manufacturing capacity [2].
Market leadership and competition
Rumors suggest Intel may spin off its chipmaking business to a consortium including TSMC [1]. On March 20, 2025, analysts discussed whether TSMC is a better investment than Nvidia, highlighting the competition in the semiconductor market [7]. In February 2025, it was reported that Chinese tech companies ordered $16 billion worth of Nvidia AI chips [8]. The International Semiconductor Industry Association predicts China will be the leading investor in chip manufacturing this year, surpassing Taiwan and South Korea [8]. These factors indicate an intensifying competitive environment for TSMC [8].
Upcoming financial results
TSMC plans to announce its Q1 2025 financial results on April 25, 2025 [7]. These results will provide insights into the company’s performance amidst the complex interplay of U.S. industrial policy, export controls, and geopolitical tensions [7]. Investors will closely scrutinize these figures to assess the resilience of TSMC’s business model and its ability to sustain market leadership in the face of unprecedented challenges [alert! ‘Future results are inherently uncertain and may be affected by unforeseen events.’][GPT].