Fresh US tariffs shake up Asian chip stocks; TSMC and Samsung edge higher

CNA

3 days ago

TOKYO: Donald Trump's threat to impose 100 per cent tariffs on semiconductor imports shook up Asian chip firms on Thursday (Aug 7), but sector giants TSMC and Samsung were boosted after he pledged to exempt those who invest in the United States.
The US president made his warning ahead of the imposition of sweeping tariffs on goods from dozens of countries, and it comes amid a global race to develop high-end chips used for artificial intelligence.
"We'll be putting a tariff of approximately 100 per cent on chips and semiconductors, but if you're building in the United States ... there's no charge," he said at the White House.
He did not give a timetable for the new levy being enacted.
In Japanese trade, Tokyo Electron, a major producer of chipmaking equipment, plunged 3.2 per cent on the news, while chipmaker Renesas sank 3.4 per cent.
Precision tools maker Disco Corporation gave up 1.3 per cent and Sumco, which makes silicon wafers, lost 1.2 per cent.
However, Taipei-listed TSMC - the world's largest contract maker of chips, which counts Nvidia and Apple among its clients - soared nearly 5 per cent as Taiwan said it would not be affected by the new tariffs.
"Because Taiwan's main exporter is TSMC, which has factories in the United States, TSMC is exempt," National Development Council chief Liu Chin-ching said in parliament.
Some Taiwanese chipmakers "will be affected" by the 100 per cent tariff, but their competitors will also face the same levy, he added.
TSMC, which is ramping up manufacturing in Arizona, has pledged to invest as much as US$165 billion in the United States, which the firm said in March was the "largest single foreign direct investment in US history".
Seoul-listed Samsung, which is also pumping billions into the world's number one economy, rose 2 per cent while South Korean rival SK hynix was also up.
"The highest-end semiconductors will be excluded" but "this kills producers of low-end chips", including those based in Malaysia or China, Alicia Garcia-Herrero, chief economist for Asia Pacific at Natixis, told AFP.
Arisa Liu, senior semiconductor researcher at the Taiwan Institute of Economic Research, said the announcement "will impact the future strategic direction of global semiconductor companies".
"Since the United States is the world's largest player in AI and related high-performance computing, this will have a relatively greater impact on companies involved in advanced processes," she said.
But Samsung and TSMC should be eligible for the exemption, she added.
Apple-linked firms were also helped after the US giant said it will invest an additional US$100 billion in the United States, taking its total pledge to US$600 billion over the next four years.
Foxconn and Pegatron both rose in Taipei.
TARIFF TALKS
"To some degree this outcome would be something of a relief," said Morgan Stanley analysts.
"Yes, 100 per cent tariffs are unpalatable but if companies are given time to restore them, the real tax is just the higher cost of building chips in the United States."
Trump's remarks came hours before his wide-ranging "reciprocal" tariffs are set to kick in against trading partners, and after he doubled his levy on India to 50 per cent over its purchase of Russian oil.
Fifty per cent tolls on Brazilian goods came into place on Wednesday, with significant exemptions, after Trump targeted Latin America's biggest economy over its prosecution of former president Jair Bolsonaro.
Investors are keeping tabs on talks between the White House and New Delhi, as well as other countries, including Switzerland, which was this week hammered with a 39 per cent toll.
Asian markets extended their recent run-up and have regained much of last week's losses sparked by the president's tariff announcements and weak US jobs data.
Tokyo, Hong Kong, Shanghai, Singapore, Seoul and Wellington were all in the green, with Taipei leading the way thanks to the surge in TSMC.
The gains followed a strong day on Wall Street, where Apple jumped more than 5 per cent and Amazon piled on 4 per cent.
Traders had already been on a buying streak as they grew optimistic that the Fed will cut rates after data last week showed US jobs creation cratered in May, June and July, signalling the economy was weakening. US futures rose on Thursday.
Oil prices rose after Trump threatened penalties on other countries that "directly or indirectly" import Russian oil, after imposing his extra toll on India.
Still, traders are keeping tabs on developments regarding Moscow and its war in Ukraine after the US president said he could meet with Vladimir Putin "very soon" following what he called highly productive talks between his special envoy and the Russian leader.