The proposed tariffs reflect growing US caution about dependence on Taiwan for chips, especially given geopolitical tensions with China and the vulnerabilities exposed by the COVID-19 pandemic. While TSMC is already expanding operations in the US, including a $65 billion investment in Arizona, the US chip manufacturing sector may take years to match Taiwan's capacity. Taiwan's economy ministry emphasized the complementary nature of US-Taiwan tech industries, while Trump has announced a $500 billion initiative to boost AI infrastructure in the US.
Key takeaways:
- President Donald Trump is threatening to impose tariffs on Taiwanese-made chips, which could impact companies like Nvidia that rely on Taiwan's TSMC for chip supply.
- Nvidia's shares dropped by 17% due to a market rout triggered by China's DeepSeek, which released an AI model potentially reducing demand for Nvidia's chips.
- US tariffs on Taiwan's semiconductors could increase costs for major customers like Nvidia, Apple, and AMD, as US chip manufacturing is currently less developed and more expensive.
- While Trump considers tariffs to boost US chip production, TSMC is already expanding operations in the US, and tariffs may complicate these efforts.