Taiwan Semiconductor Stock Rebounds After Selloff, US-Taiwan Chip Partnership Still Faces Tariff Threats

On Tuesday, Taiwan Semiconductor Manufacturing Co TSM stock saw some redemption after a selloff driven by China's progress in AI on Monday.

The Taiwan economy ministry told Reuters that semiconductor business between Taiwan and the U.S. is a "win-win" model for both sides given the high level of complementarity, especially the U.S.-designed, Taiwan-foundry model.

The ministry commented in response to tariff threats from U.S. President Donald Trump, something he has been indulging since his presidential campaign days.

Also Read: BYD, Geely, SAIC Contest EU's High EV Tariffs In Court

Trump has called Chinese AI start-up DeepSeek's performance a "wake-up call" and "positive" for America's tech sector and threatened tariffs on foreign-made semiconductor chips, including those made by Taiwan Semiconductor, unless they start producing them stateside, SCMP reports.

Taiwan, home to the key contract chipmaker Taiwan Semiconductor, is a key link in the global technology supply chain for Apple Inc AAPL and Nvidia Corp NVDA.

Trump voiced plans to impose tariffs on imported chips, pharmaceuticals, and steel in line with his MAGA ambitions.

In 2020, under the first Trump administration, Taiwan Semiconductor shared plans to build a $12 billion factory in Arizona. The chipmaker's total investment now stands at $65 billion. It bagged $1.5 billion in subsidies from the U.S.

The chipmaker committed $38 billion—$42 billion in fiscal 2025 capex versus fiscal 2024 capex of $29.8 billion. 

In January, Taiwan Economy Minister Kuo Jyh-huei voiced the negligible impact of any tariffs on semiconductor exports.

Last week, Trump directed federal agencies to investigate persistent U.S. trade deficits and unfair trade practices by other countries. Taiwan's trade surplus with the U.S. grew 83% in 2024, with exports to the U.S. hitting $111.4 billion.

Recently, Taiwan Semiconductor chief C.C. Wei overlooked concerns over U.S. AI sanctions. He flagged the chipmaker's focus on advanced packaging, citing that non-AI sectors like automotive and crypto mining remain unruffled by embargoes.

Taiwan Semiconductor stock surged over 64% in the last 12 months. Investors can gain exposure to the stock through VanEck Semiconductor ETF SMH and iShares Semiconductor ETF SOXX.

Price Action: At the last check on Tuesday, TSM stock traded higher by 0.51% to $193.29.

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