Trump’s New Chip Regulations May Require TSMC to Equalize U.S. and Taiwan Production or Risk Major Tariffs

Recent developments in President Trump’s chip manufacturing policies could pose significant challenges for TSMC, potentially requiring the company’s U. S.operations to match their Taiwanese counterparts in capacity and production standards.

The Trump Administration’s Push for Domestic Production and Reduced Offshore Dependence

Since President Trump’s announcement of potential tariffs aimed at chip manufacturers like TSMC and Samsung, uncertainty around these tariffs has surged. Originally, proposed tariffs went up to 100%.While companies committing to U. S.manufacturing were initially exempt, a new wave of tariffs appears to be on the horizon, particularly targeting businesses that rely heavily on overseas manufacturing.

A recent Wall Street Journal report revealed that the U. S.government is enforcing a “1:1″manufacturing ratio. This means firms like TSMC could face steep tariffs unless they produce domestically equivalent to what they import.

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

This mandate poses a considerable issue for TSMC, particularly given the notable differences in production technology and volume between its facilities in Taiwan and the United States. Nevertheless, TSMC’s substantial investments in American manufacturing operations indicate a serious commitment to U. S.production. The firm has declared plans to develop advanced semiconductor nodes in the U. S., signaling a noteworthy shift from Taiwanese-centered manufacturing.

Silicon wafer inside a semiconductor manufacturing machine. — Image Credits: TSMC

Companies are expected to receive a “relief period”that permits them to source chips from foreign facilities while domestic plants become operational. However, failing to adhere to these new regulations could result in substantial tariffs. Another concern for TSMC is the perception within Taiwan that the company’s focus on U. S.capabilities is transforming it into a more American-centric foundry. While core research and development efforts remain rooted in Taiwan, the implications of Trump’s policies may lead both regions to produce similar node technologies, triggering what could be seen as a ‘technology transfer’.

The overarching message from the U. S.government suggests a strategic pivot in the chip supply chain, aiming for a comprehensive shift toward domestic production. It’s important to note that TSMC often relies on overseas assembly services, particularly for high-precision packaging. By pushing for a 100% ‘Made in USA’ approach, the Trump administration is demanding that all facets of chip production be sourced domestically, regardless of the complexity involved.

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