Trump criticized the US chip regulation law, and said that he would implement customs tariffs on chips coming from Taiwan if he was elected president. Such tariffs would affect the world’s leading chip builder, Taiwan Semiconductor Manufacturing Company, whose client companies include Nvidia and Apple.
Shares of Taiwan Semiconductor closed down 4.3% on Monday.
“As you know, Taiwan stole our chip business… and they want protection,” Trump said in the podcast published on Saturday evening.
The Taiwanese company makes chips for all huge companies, such as Amazon, Google, and Microsoft. UBS analysts estimate that more than 90% of the world’s advanced chips are manufactured by TSMC. Intel and Samsung are among the companies trying to compete, but they have faced a series of setbacks and challenges.
Given the broader geopolitical concerns surrounding Taiwan and the threat of invasion by China, pressure has been growing on US companies to build an alternative to TSMC in the US.
“We want to localize advanced infrastructure here in the United States, and to be honest, from a policy standpoint, it shouldn’t really matter who builds it,” analyst Stacey Rasgon of Bernstein told CNBC.
But at the same time, Rasgon added, the idea that Taiwan stole chip manufacturing from the United States was “ridiculous.”
TSMC is set to receive nearly $7 billion from the US Department of Commerce to build its factory in Arizona as part of the Computer Chip Act. On the company’s earnings call two weeks ago, CEO Sissy Wee said its Arizona plant was making progress, and production volumes were expected to increase in 2025.
Commerce Department funds have not yet been allocated to TSMC or other major semiconductor companies. Sources say the funds are expected to be allocated by the end of this year as long as specific milestones are met.
Trump also suggested that foreign companies should not be able to enter the United States and use government money. “This chip deal is very bad,” he said. We’ve put billions of dollars into wealthy companies to come and borrow money and build chip companies here. “They won’t give us good companies anyway.”
Mizuho analysts recently wrote that a Trump victory would be bad for the Taiwanese company. While analysts at Citibank debate how much tariffs could increase costs across the chip supply chain, they say tariffs will not be easy for governments to deal with as “[tariffs]will require complex audits of thousands of devices, which contain… Variety of chips.”
Source: CNBC
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