TSMC Cites Minimal Tariff Impact, Maintains that Demand for AI Remains High

Taiwan Semiconductor Manufacturing Company has admitted that US tariffs have had an impact on it. According to Reuters, the giant chip manufacturing company has raised the matter with Washington. Despite the TSMC tariff impact, demand for AI remains high and outpaces supply.

Indirect Impact

The trade policies that President Donald Trump’s administration has adopted have created uncertainty in the chip industry across the world, including TSMC, which produces the most advanced chips for US big techs like Nvidia and Apple. These tech companies have experienced strain on their supply chains as a result of the tariffs.

TSMC says that the tariffs have not affected it directly and that it is yet to see a shift in customer behaviour as a result of the uncertainty in the industry. Speaking during the yearly shareholders meeting, TSMC CEO C.C. Wei said the situation could get clearer in months to come.

“Tariffs do have some impact on TSMC, but not directly. That’s because tariffs are imposed on importers, not exporters. TSMC is an exporter. However, tariffs can lead to slightly higher prices, and when prices go up, demand may go down. If demand drops, TSMC’s business could be affected. But I can assure you that AI demand has always been very strong and it’s consistently outpacing supply,” Wei said.

TSMC Response to Trade Tariffs

TSMC said it has been engaging the Department of Commerce in the US about the tariffs. According to CEO Wei, TSMC expressed concerns on the possibility of increased production costs in the US as a result of the levies. This is because some of the equipment it buys from US suppliers are produced in Asia.

“The U.S. commerce department said this is open for discussion, but how long that will take remains unclear. The real point is that we are in active communication, because only through understanding can they realise the consequences,” Wei added.

Trump tariffs are part of a larger economic plan designed to promote local semiconductor production while reducing reliance on Chinese technology. The tariffs have altered global price structures and affected businesses globally.

Last month, TSMC gave a bullish outlook for 2025. The outlook was based on robust AI chip demand to power applications. The world’s biggest contract semiconductor maker is investing over $165 billion in the US to construct new factories. This is $100 billion more than its initial commitment. According to Wei, President Donald Trump was informed of the additional $100 billion investment.

Growing Political Risks

TSMC CEO also addressed rampant media reports about the company’s plans to set up chip manufacturing plants in the United Arab Emirates (UAE). He said the chip maker does not have such factories in the Middle East because it’s highly unlikely it would get clients in that part of the world. Wei also weighed in on the impact of the Taiwan dollar on TSMC. He said a stronger dollar has affected the profitability of the company negatively.

“The currency appreciation reduced our gross margin by more than 3 percentage points,” he said.

Additionally TSMC faces political risks emanating from the fact that Beijing views Taiwan as part of China’s territory. China has been stepping up military pressure on Taiwan, which is democratically and independently governed. As tensions between Taiwan and China continue to rise, TSMC continues to face serious geopolitical challenges. The company acknowledges these risks and admits that they are beyond its control.

“If something happens that we don’t want to happen, it’s a matter for governments, not for TSMC alone,” Wei said.
Even with these concerns, the chip manufacturer remains positive about its future outlook.