According to a report from Economic Daily News, Trump’s return to the White House ushers in a “Trump 2.0” era, potentially posing new challenges for TSMC, as Trump previously threatened to charge a “protection fee” due to TSMC’s stronghold on U.S. chip production. The report highlighted that, according to industry assessments, TSMC faces a high likelihood of tax increases.
The report, citing industry sources, outlined four potential scenarios for TSMC under a “Trump 2.0” administration: 1) increased taxes and removal of subsidies, the least favorable for TSMC; 2) increased taxes with conditional subsidies, which might require TSMC to expand its U.S. investments or accelerate the setup of advanced manufacturing processes in the U.S.; 3) no tax increase but removal of subsidies; and 4) no change in taxes or subsidies, the most favorable but least likely scenario.
According to the report, given Trump’s “America First” stance, maintaining the status quo is unlikely. The report pointed out, Trump is likely to choose between raising taxes and adjusting the CHIPS Act subsidies, or implement both simultaneously, to “deal with” TSMC.
The report highlighted that, at present, increased taxes seem more likely, which TSMC might counter by raising prices for its customers. However, if the Trump administration were to make increased U.S. investments a condition for subsidies, TSMC would face challenges with higher capital expenditures and rising manufacturing costs.
However, the report noted that, while the CHIPS Act’s overall direction will impact TSMC, local policies could also play a significant role due to the division of responsibilities between federal and state governments in the U.S.
On the other hand, regarding TSMC’s domestic competitor in the U.S., the report suggests that under Trump’s “America First” policy, struggling Intel could experience a revival. The government may increase subsidies for Intel and seek support from other U.S. companies or large investors, potentially including acquisitions of some Intel divisions by major players like AMD or Marvell, bringing in additional financial support.
According to the report, citing industry sources, if Trump pursues “protection fees” and prioritizes U.S. manufacturing, it could accelerate the semiconductor industry’s shift away from globalization, reflecting TSMC founder Morris Chang’s prediction that “globalization is dead” amid rising geopolitical tensions.
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(Photo credit: TSMC)