tsmc braces for impact as trump threatens tariffs on taiwan-made chips
Hsinchu, Tuesday, 28 January 2025.
In a bold move, President Trump has threatened tariffs of up to 100% on chips manufactured in Taiwan, specifically targeting tsmc. This decision announced in a recent speech aims to bring semiconductor production back to the U.S. by imposing steep tariffs, making foreign production less attractive. This could lead tsmc to reassess its supply chain strategies. The company, which controls 98% of the advanced chip market, could face considerable challenges if tariffs are imposed. This development could disrupt the pricing of consumer electronics, as tsmc is a major supplier to tech giants like Apple and Nvidia. Meanwhile, Taiwan emphasizes the mutual benefits of its tech trade with the U.S., suggesting that disrupting such a relationship could have wide-reaching impacts on both nations’ industries. The semiconductor giant might need to accelerate its expansion plans in the U.S. to mitigate these potential tariff impacts.
Trump’s tariff strategy and market reaction
President Trump announced plans to impose tariffs ranging from 25% to 100% on Taiwan-manufactured semiconductors during a Republican conference speech on January 26, 2025 [3][5]. His administration aims to incentivize companies to relocate chip production to the United States without offering financial subsidies [1]. The announcement triggered immediate market reactions, with technology stocks experiencing significant declines across Asia [8]. Japanese semiconductor equipment manufacturer Advantest saw its stock plunge by 10%, while other tech-related companies in Japan and Australia faced similar downward pressure [8].
Taiwan’s diplomatic response
Taiwan’s Presidential Office spokesperson Kuo Ya-hui responded to Trump’s threats by emphasizing the long-standing cooperative relationship between Taiwan and the United States in semiconductor technology [2]. The Taiwan Economic Ministry released a statement highlighting the mutually beneficial nature of the current arrangement, where American companies design chips while Taiwan handles manufacturing [2]. This partnership has created what officials describe as a win-win business model that has served both nations’ interests [2].
Economic implications and industry impact
The proposed tariffs could significantly impact consumer electronics prices in the U.S. market [3][5]. TSMC, which supplies chips to major tech companies including Apple, AMD, Nvidia, and Qualcomm [1][3], would face immediate challenges in maintaining its current business model. While TSMC has already invested $65 billion in U.S. manufacturing facilities [2], industry experts note that building new semiconductor fabs takes three to four years [3], making quick production shifts impractical.