"TSMC Impact Inevitable if Trump Wins"... Taiwan Seeks Breakthrough in Europe [Taiwan Chip News]

TSMC Stock Fluctuates Following Trump Remarks

Former U.S. President Donald Trump has caused a major shock in the semiconductor market by announcing that he would impose tariffs on Taiwanese semiconductors if re-elected. Following Trump's remarks, TSMC faced a sharp decline in its stock price amid uncertainty, and analyses suggested that a Trump re-election could be unfavorable for TSMC. As the U.S.-China conflict intensifies, Taiwan is seeking breakthroughs by strengthening cooperation with Europe.

According to industry sources on the 2nd, immediately after former President Trump's remarks on the 25th of last month (local time), TSMC's American Depositary Receipt (ADR) stock price on Wall Street plummeted by 4.3%. In a recent interview, Trump reiterated a tough stance on Taiwan, saying, "Taiwan stole our semiconductor industry. Yet they expect to be protected."

Former U.S. President and Republican presidential candidate Donald Trump mentioned twice that Taiwan stole the U.S. semiconductor industry, and each time, TSMC's stock price was significantly impacted.
[Image source=Yonhap News Agency·AFP]

As the likelihood of Trump's re-election grows, his comments regarding Taiwan are receiving renewed attention. In a Bloomberg Businessweek interview last July, when asked whether the U.S. would defend Taiwan against China, Trump responded, "Taiwan must pay us for the cost of defense." He added, "We are no different from an insurance company." He argued that Taiwan should pay the price like an insurance premium to receive U.S. military protection. On the day of this statement, TSMC's ADR stock price dropped 8%, falling 10% over the week. Trump also criticized the semiconductor deal (referring to the CHIPS Act) as "the worst," stating, "We invested billions, but wealthy Taiwanese companies borrowed money to establish semiconductor companies in the U.S."

Analysts at Japan's Mizuho Securities assessed that a Trump re-election would be unfavorable for TSMC. Analysts at U.S. Citigroup have begun studying how much cost tariffs would impose on the entire semiconductor supply chain. They said, "If tariffs are imposed, numerous types of semiconductors and thousands of products using those semiconductors will be affected," adding, "Governments will need complex reviews to handle this, but it will not be easy." Large data center operators such as Amazon, Google, and Microsoft, which rely on TSMC, are also expected to be significantly impacted by such tariff measures, as over 90% of the world's advanced semiconductors are produced by TSMC.

U.S. CNBC reported that due to Taiwan's geopolitical issues and the potential threat of Chinese invasion, American companies are under pressure to build semiconductor production facilities domestically to replace TSMC. Bernstein analyst Stacy Rasgon said, "We want to build advanced infrastructure in the U.S., but who builds it is not important from a policy perspective," and called Trump's statement that "Taiwan stole U.S. semiconductor technology" absurd.

TSMC CEO Wei Zhejia recently announced in an earnings report that "mass production is scheduled to begin in 2025 at the Arizona plant in the U.S." This is part of Taiwan's efforts to strengthen semiconductor production capacity in the U.S. market. However, as the U.S.-China trade war intensifies, significant difficulties are expected in the semiconductor industry. Patrick Moorhead of Moore Insights & Strategy pointed out, "If former President Trump is re-elected, there is a possibility of imposing large tariffs on China, which would provoke Chinese retaliation," adding, "This situation is similar to what Micron faced in the past."

Experts warn that even if Democratic presidential candidate Vice President Kamala Harris is elected, semiconductor trade will not become completely smooth. Due to the Biden administration's export restrictions on China, companies like Nvidia and other semiconductor firms have already suffered setbacks in their Chinese performance. Before the regulations, Nvidia's sales in China accounted for over 25% of total sales, but now it has dropped to less than 10%.

On the 18th of last month, at the 'Advanced Semiconductor Design Research Center' in Brno, Czech Republic, officials from Taiwan's National Experimental Research Institute, Xiepa Technology, Zhensheng Semiconductor, Dingzi Technology, and Guangzi Technology took a commemorative photo with Jana Havlikova, Deputy Minister of the Czech Ministry of Science and Innovation.
[Photo by National Experimental Research Institute]

Amid this political uncertainty in the U.S., Taiwan is strengthening cooperation with Europe to diversify risks and secure a stable supply chain.

On the 18th of last month, Taiwan's National Experimental Research Institute under the National Science Council held an opening ceremony for the Advanced Chip Design Research Center (ACDRC) in Brno, Czech Republic. Through this, Taiwan and the Czech Republic will promote deeper cooperation in semiconductor design and manufacturing. After signing contracts and holding a launch ceremony in Taiwan in June this year, operations have now officially begun. Collaborative projects are underway in various fields including automotive microcontrollers (MCUs), network security ICs, IC design post-processing automation tools, AI chips, and quality control and testing equipment for cutting-edge vertically integrated silicon carbide (SiC).

The day before, the 'Semi Impact Forum Brno' was held with the theme of 'AI and Semiconductor Innovation in the Automotive Industry,' attended by major global leaders in the semiconductor field. Scholars, industry experts, policymakers, and semiconductor manufacturers and startups from the Czech Republic and Taiwan shared the latest trends in AI and automotive technology. They particularly focused on the rapid growth of the European semiconductor ecosystem and the impact of TSMC's new production facility under construction in Dresden, Germany, near the Czech Republic.

Lin Zharong, Taiwan's Minister of Foreign Affairs, who attended the opening ceremony, said, "Taiwan is a powerhouse in semiconductor manufacturing and design, possessing globally leading semiconductor research institutions and companies such as the National Experimental Research Institute and TSMC." Cai Hongying, director of the National Experimental Research Institute, stated, "We will strengthen Taiwan's semiconductor industry network in Europe and build mutually beneficial cooperative relationships."

Taiwan Economic Daily News = Reporters Liu Zhongyong and Chao Songqing / Translation = Asia Economy