TSMC says US tariffs have some impact but AI demand robust

Business Recorder

2 days ago

HSINCHU, TAIWAN: Taiwan's TSMC said on Tuesday that U.S. tariffs were having some impact on the company and had been discussed with Washington, but demand for artificial intelligence (AI) remains strong and continues to outpace supply.
U.S. President Donald Trump's trade policies have created much uncertainty for the global chip industry and TSMC, the top producer of the world's most advanced semiconductors whose customers include Apple and Nvidia.
Chief Executive C.C. Wei, speaking at TSMC's annual shareholders meeting in the northern Taiwanese city of Hsinchu, said the company had not seen any changes in customer behavior due to tariff uncertainty and the situation might become clearer in coming months.
'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,' he said.
'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.'
In April, the company, the world's largest contract chipmaker, gave a bullish outlook for the year on robust demand for AI applications.
Wei said TSMC had been talking to the U.S. Department of Commerce about tariffs, expressing concern early on that the levies could increase production costs in the country where it is investing $165 billion to build new factories, as some equipment purchased from U.S. suppliers is made in Asia.
'The U.S. commerce department said this is open for discussion, but how long that will take remains unclear,' he added. 'The real point is that we are in active communication, because only through understanding can they realise the consequences.'
Wei said he had told Trump the extra $100 billion investment, which he announced standing next to the president in March, would be difficult to complete within five years.
'He said, 'Mr Wei, do your best, that's good enough.''
Asked about media reports that the company had been looking at building chip factories in the United Arab Emirates, Wei said TSMC had no plans for any such plants in the Middle East because it was 'not very likely' they would have customers there.
Domestically, TSMC's margins are being pressured by the recent appreciation of the Taiwan dollar, which Wei said had reduced its gross margin by more than 3 percentage points.
TSMC also faces broader political risk as China steps up military pressure on democratically and separately governed Taiwan, which Beijing views as 'sacred' Chinese territory.
'If something happens that we don't want to happen, it's a matter for governments, not for TSMC alone,' Wei said, responding to a question about a possible crisis in the Taiwan Strait.