Pure chip production cost is also a factor. Labor is far more expensive in the U.S. than in Taiwan, so high-end chips made there are expected to be substantially pricier than usual. This would eat into TSMC's profit margin, and/or require big shoppers like Nvidia and Apple to be willing to pay premium prices for the same goods, risking the investment. There's a fair chance that further U.S. government intervention could help remedy this, though, as the Trump administration can't help but keep twiddling the tariff knobs everywhere.
On that note, Washington's desire to essentially reshore 40% of advanced chip production is seen by many as unrealistic . Just today, Nvidia CEO Jensen Huang arrived in Taiwan and tried offering some clarification , saying that that 40% slice is meant to be taken from new chip production. He further believes that TSMC must expand beyond Taiwan to meet current needs, remarking on Taiwan's energy capabilities as one key limitation factor.
Even still, those statements appear to be at odds with those of the opposite corner, with Economics Minister Kung Ming-hsin saying that Taipei wants to keep 85% of advanced chip production capacity by 2030, a split set to increase to 80%/20% by 2036.
Moreover, since the deal has yet to be ratified by the opposition-controlled Taiwan Executive Yuan. Unsurprisingly, said opposition has been fierce in criticizing the arrangement. Several members pointed out that the government made the deal under duress of tariffs, without properly consulting all the parties, and offering insufficient info. The main opposition party, Kuomintang (KMT), called for a full legislative review of the agreement on the day after it was signed.
Opponents also remarked that Taiwan would effectively use its own money to fund U.S. investments, and that the negotiation itself was poor, as Taipei only got the same 15% general tariff reduction as other countries while offering up its most precious strategic commodity. Some could counter-argue that the duty-free chip exports could be more valuable overall, however.
TSMC and Taiwan are definitely living in interesting times, and we'll be sure to hear a lot more about this trade deal in the coming weeks. It'll be exceedingly difficult for Taiwan to keep its huge customers happy, thus keeping the silicon shield powered, without losing a technological edge to its competitors, nor moving its best goods out of the country. Either of those would turn off the shield regardless. It's definitely a balancing act on a tightrope.
Bruno Ferreira is a contributing writer for Tom's Hardware. He has decades of experience with PC hardware and assorted sundries, alongside a career as a developer. He's obsessed with detail and has a tendency to ramble on the topics he loves. When not doing that, he's usually playing games, or at live music shows and festivals. ","collapsible":{"enabled":true,"maxHeight":250,"readMoreText":"Read more","readLessText":"Read less"}}), "https://slice.vanilla.futurecdn.net/13-4-13/js/authorBio.js"); } else { console.error('%c FTE ','background: #9306F9; color: #ffffff','no lazy slice hydration function available'); } Bruno Ferreira Contributor Bruno Ferreira is a contributing writer for Tom's Hardware. He has decades of experience with PC hardware and assorted sundries, alongside a career as a developer. He's obsessed with detail and has a tendency to ramble on the topics he loves. When not doing that, he's usually playing games, or at live music shows and festivals.
Key considerations
- Investor positioning can change fast
- Volatility remains possible near catalysts
- Macro rates and liquidity can dominate flows
Reference reading
- https://www.tomshardware.com/tech-industry/semiconductors/SPONSORED_LINK_URL
- https://www.tomshardware.com/tech-industry/semiconductors/ongoing-trade-war-has-tsmc-and-taiwan-stuck-between-a-rock-and-a-hard-place-concerns-mount-surrounding-u-s-deals-cracking-the-nations-silicon-shield#main
- https://www.tomshardware.com
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