tsmc faces challenges amid new us semiconductor policies
Hsinchu, Tuesday, 18 February 2025.
Taiwan Semiconductor Manufacturing Company (TSMC) is gearing up for a turbulent period as new U.S. policies and tariffs loom over the semiconductor industry. Former U.S. President Donald Trump has announced reciprocal tariffs affecting Taiwan, raising concerns about TSMC’s operations and stock performance. The geopolitical tension, reminiscent of the historical U.S.-Japan semiconductor rivalry, threatens to disrupt TSMC’s business landscape. Analysts indicate that Trump’s strategy to relocate chip manufacturing back to the U.S. might not meet expectations, primarily due to high costs and infrastructure challenges. TSMC, meanwhile, explores a potential partnership with Intel, which could include joint ventures backed by the U.S. Chips Act funding. As the semiconductor industry continues to evolve, the balance between technological leadership and geopolitical strategies will be crucial for TSMC, potentially influencing Taiwan’s role in the global semiconductor market.
Market impact and revenue projections
The semiconductor industry faces significant market shifts in 2025. Industry analysts project global semiconductor revenue to reach 697 billion, up from 627 billion in 2024 [3]. The Semiconductor Industry Association anticipates a growth rate of 19.1% for 2024 [3]. Despite these positive indicators, Trump’s proposed 25% tariff on semiconductor imports threatens to disrupt market dynamics [1]. TSMC’s stock performance could face pressure as the company navigates these challenges while maintaining its technological edge [GPT].
Strategic partnership developments
TSMC is exploring a significant partnership with Intel, potentially involving a joint venture for 3nm and 2nm wafer fabrication [6]. The collaboration could receive funding support from the U.S. CHIPS Act, though negotiations remain in early stages [6]. This strategic move comes as TSMC’s chairman C.C. Wei highlighted that establishing operations in Arizona required $35 million just for regulatory compliance [1]. The partnership discussions reflect TSMC’s efforts to adapt to changing geopolitical pressures while maintaining its market position [GPT].
Manufacturing cost disparities
A critical challenge in relocating semiconductor production to the U.S. involves significant cost differences. The Semiconductor Industry Association reports that building chip factories in the U.S. costs 20% to 40% more than in Asian countries like South Korea and Singapore [1]. This cost disparity stems from extensive government subsidies in Asian markets and established infrastructure [1]. Industry experts, including Tufts University professor Chris Miller, point to the U.S.’s historical undervaluation of foundries as a key factor in the current manufacturing imbalance [1].