
This article does not provide investment advice. The author does not hold any positions in the stocks mentioned.
NVIDIA’s CEO, Jensen Huang, embarked on a visit to Taiwan to engage in discussions with TSMC regarding critical matters such as tariffs and transfer pricing. His arrival made waves today when he addressed the media, shedding light on several important topics, including NVIDIA’s next-generation Rubin AI chip and the ongoing concerns from China regarding potential security vulnerabilities in the H20 GPU. Huang also touched upon his interactions with former President Donald Trump concerning the export license for the H20 AI GPU.
Chip Issues Impacting TSMC’s Share Prices, Analyst Reports
During his media briefing, Huang elaborated on his agenda with TSMC’s leadership, specifically noting that the design phase for NVIDIA’s Vera Rubin AI GPUs has reached the tapeout stage. Tapeout is a crucial step in chip manufacturing where the design is finalized and prepared for initial production, allowing for the identification of potential defects. Although NVIDIA’s stock has experienced a decline of 3.7% over the past week as investors pivot away from AI-focused equities, this meeting underscores the company’s commitment to advancing its technology.
Additionally, a report from Taiwan’s Economic Daily highlights that Huang is also focused on the ramifications of tariffs on NVIDIA’s products and the intricacies of transfer pricing during his discussions with TSMC management. Transfer pricing pertains to the internal pricing strategies a company employs when trading products among its subsidiaries, often utilized to minimize tax expenses.
Huang’s visit coincides with speculation regarding the Trump administration’s interest in acquiring equity stakes in TSMC, a claim that has been dismissed by reports from the Wall Street Journal. Despite this, TSMC shares have seen a lack of buying interest in Taiwan. While conversing with reporters at the airport, Huang commended TSMC as an exemplary company, underscoring his respect for the semiconductor giant amidst its fluctuating stock performance.
According to an analysis quoted in a report by UDN, Huang’s visit is fundamentally aimed at negotiating global production capacity allocation, addressing tariff implications for NVIDIA’s offerings, and engaging in transfer pricing discussions with TSMC’s executive team. This aspect presents a significant challenge for TSMC, necessitating a consensus between CEO Dr. C.C. Wei and Huang to secure favorable terms for both corporations.
Within the context of global supply chains, transfer pricing refers to how one business unit charges another within the same corporation for goods and services, a strategy that enables companies to optimize their tax liabilities by relocating profits to regions with favorable tax regimes. Discussions between Huang and Wei could potentially revolve around the pricing arrangements of chips produced at TSMC’s Arizona facility, where the subsidiary TSMC Arizona operates, thereby asserting a crucial link to NVIDIA’s procurement strategies.
Given NVIDIA’s substantial $500 billion investment plan for U. S.data centers and its procurement activities linked to TSMC’s Arizona facility, the company may be poised to mitigate the adverse impacts of semiconductor tariffs enforced by the Trump administration. Nevertheless, since a significant proportion of TSMC’s advanced manufacturing capabilities—especially at cutting-edge nodes like 3-nanometer and 2-nanometer—are still concentrated in Taiwan, the possibility remains that both NVIDIA and TSMC could become entangled in the ongoing tariff disputes.
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