President Trump’s chip policies might have taken a turn that could prove to be huge trouble for TSMC, as the USG could demand that the US facility be on par with the Taiwanese ones.
The Trump Administration Now Wants Everything to Be Produced In The U.S. & Avoid the Reliance On Off-Shore Manufacturing
The uncertainty around chip tariffs has been pretty high ever since President Trump disclosed intentions to impose them on the likes of TSMC and Samsung. The initial figures were claimed to be up to 100%. Later, companies committed to manufacturing in the US were exempted from chip tariffs, but now, it seems like a new round of them will target firms that are reliant on overseas production. A report by the Wall Street Journal claims that the USG is demanding a “1:1” for domestic and overseas manufacturing; otherwise, companies like TSMC could see massive tariffs being imposed.
The policy’s goal is to have chip companies manufacture the same number of semiconductors in the U.S. as their customers import from overseas producers. Companies that don’t maintain a 1:1 ratio over time would have to pay a tariff, according to people familiar with the concept.
– WSJ
Well, this is a huge problem for TSMC and its partners, considering the massive disparity in process technology and production volume between the firm’s US and Taiwan facilities. But, considering the huge investments being made by the Taiwan giant in the US, the process of shifting towards US manufacturing has definitely been bolstered, and more importantly, the firm has announced intentions to produce cutting-edge nodes in America as well, which means that there’s a clear intention to pivot away from Taiwan, in terms of fab production for now.
It is claimed that chip companies will be given a “relief period,” which will allow them to source their chips from overseas fabs when domestic facilities are ready. Failure to comply with the policy could lead to massive tariffs. One of the other major problems that might pop up for TSMC is that the company’s push towards American manufacturing has bothered Taiwan to the point where many locals believe that the firm is turning into a US foundry. While core R&D remains in Taiwan, President Trump’s policy could lead to Taiwan and the US producing the same node technology, which is one of the steps towards a ‘technological transfer’.