Taiwan Semiconductor Under Pressure From Trump Tariff Threats, Could Push Advanced Packaging Capacity to US

Donald Trump’s tariff threats prompted Taiwan’s deputy economy minister, Cynthia Kiang, to canvass Washington in person, the Financial Times reports.

Taiwan’s move coincides with Taiwan Semiconductor Manufacturing Co’s TSM board meeting in Arizona for the first time.

Trump wants to tax imported semiconductors and scrap the U.S. CHIPS And Science Act that agreed to subsidize Taiwan Semiconductor’s committed $65 billion investment in U.S. production capacity with grants worth $6.6 billion.

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Since his presidential campaign, Trump has verbally attacked contract chipmaker Taiwan Semiconductor for allegedly stealing business from the U.S. and flagged the absence of a defense treaty between the countries.

A key point of contention is Taiwan’s decision to keep its advanced manufacturing technologies and research and development center in Taiwan.

According to a report, Taiwan Semiconductor is building a 1-nm fabrication facility in southern Taiwan, in Shalun, Tainan. The chipmaker has also built new factories in Baoshan, Hsinchu, Nanzi, and Kaohsiung as 2-nm production bases.

Taiwan economy minister Kuo told the FT that Kiang aims to convince the U.S. that Taiwan Semiconductor customers gain a much larger profit share than the manufacturer does.

The board could also decide to build capacity in the U.S. for advanced packaging, which Taiwan Semiconductor has kept in Taiwan, FT cited unnamed sources familiar with the matter.

Although North America accounted for 70% of Taiwan Semiconductor’s revenue in 2024, Dan Nystedt of TriOrient investment company told the FT that the chipmaker shipped most of its chips to China and India to be placed inside iPhones and servers and then to the U.S.

Therefore, analysts told the FT that it would be challenging for U.S. customs to target most of the chips the chipmaker made for the U.S. as the U.S. tariffs typically apply to finished products.

However, Trump’s tariffs on Mexico and Canada prompted Taiwanese groups like Foxconn and Quanta Computer to explore shifting the production lines.

Taiwan Semiconductor’s first Arizona plant is producing 4-nm chips. It promised to bring 2-nm chip production to the U.S. in 2028 and a third fab online in Arizona by 2030.

Taiwan Semiconductor stock surged 60% in the last 12 months as a key contract chip maker for Nvidia Corp NVDA, Apple Inc AAPL, Broadcom Inc AVGO, Tesla Inc TSLA and more.

Price Action: TSM stock is down 1.77% to $205.05 at the last check on Wednesday.

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