Taiwan’s chip firms could dump high tariff costs on U.S. buyers

In a bid to encourage local chip production, U.S. President Donald Trump has recently threatened 100% tariffs on semiconductor imports, particularly on companies with no manufacturing lines in the region. This is massive news for TSMC, which has already invested billions in local fabs.

Trump’s absurd tariff figures are likely to exempt TSMC, which was the first to establish factories in the U.S. It currently has a $165B investment planned in Arizona that could, in the future, push to $200B. But other, much smaller companies will likely bear the burden.

At this point, the industry is in somewhat of a “wait and see” mode, where they’ll be eyeing exact details on moving to the U.S. It isn’t clear at this point whether the tariff exemptions would hold for equipment makers.

Taiwan’s chip industry won’t absorb massive tariffs, likely pushing up costs for equipment headed to the U.S.

Taiwan’s local media have reported that if the tariffs were to be imposed on the equipment manufacturers, the cost would be passed onto the customers, not the suppliers, and since most of Taiwan’s chips are sold in the U.S, the costs would essentially be pushed back to the U.S. buyers.

This, however, may not be an issue for local factories, as they had already mapped alternate supply lines during the de-China shifts. But still, a response plan could only be drafted once the tariff details are inked.

Mature process foundries, like Taiwan’s United Microelectronics, aren’t interested in local production because the U.S. already has domestic lines in these areas, particularly with Texas Instruments, and this competition makes U.S. investment less attractive for the Taiwanese company.

UMC is currently in collaboration with Intel on its 12nm process node, but if these tariffs were to come into effect, the company would risk losing these orders to local suppliers. At the moment, the exact details are yet to be confirmed, and other Taiwanese companies are also negotiating with America on lowering the 20% reciprocal tax imposed on them.

ABOUT THE AUTHOR

Muhammad Qasim


Qasim's deep love for technology and gaming drives him to not only stay up-to-date on the latest developments but also to share his informed perspectives with others through his writing. Whether through this or other endeavors, he is committed to sharing his expertise and making a meaningful contribution to the world of tech and gaming.