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Trump's Taiwan chip tariff threat could be a fresh blow to Nvidia

Jan 28, 2025 - businessinsider.com
President Donald Trump is considering imposing tariffs of up to 100% on Taiwanese-made semiconductors, which could significantly impact companies like Nvidia that rely on Taiwan's TSMC for chip supply. This potential move aims to encourage chip production in the US but could lead to increased costs for Nvidia, Apple, and AMD, as US manufacturing is currently less developed and more expensive. Nvidia's stock recently dropped 17% due to a market reaction to a new AI model from China's DeepSeek, which claims to rival OpenAI's technology with fewer resources.

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.
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