[News] Trump’s Tariffs Likely to Hit Taiwan’s AI Server Supply Chain, with Foxconn among the Impacted

As president-elect Donald Trump calls for tariffs on imports from Mexico, Canada and China, the AI server supply chain is expected to bear the brunt of the impact, given that U.S. imports the highest value of servers from Mexico, according to a report from the Economic Daily News. Taiwanese companies led by Foxconn, with their significant production capacity in Mexico, are closely monitoring policy developments, the report notes.

Tech giants have heavily invested in Mexico, focusing on automotive and server assembly as a strategic gateway to the North American market. However, industry insiders cited by the report suggest that Trump’s proposed tariffs could effectively dismantle the US-Mexico-Canada Agreement (USMCA), which allows zero tariffs for goods produced within the region.

NVIDIA Supplier Foxconn Fired the First Shot

According to the Economic Daily News, Mexico is the leading supplier of servers imported into the U.S., accounting for 67.4% of total server imports last year. Although shipments from Taiwan to the U.S. have also seen significant growth, Mexico’s proximity to the U.S. gives it a geographic advantage, making it the preferred choice for Taiwanese manufacturers supplying the U.S. market.

Trump’s tariff measures targeting Mexico could severely impact contract manufacturers headquartered in Taiwan, like Foxconn, Inventec, Wistron, and Wiwynn, all of which have established operations in the region, the report indicates.

While Trump threatened to impose a 25% tariff on imports from Mexico, Foxconn, one of NVIDIA’s major suppliers, responded rapidly by approving a new U.S. factory plan on November 26, the Economic Daily News report adds. The company plans to invest USD 33 million to acquire land and facilities in Houston, Texas, as reported.

According to the report, Foxconn is one of the few ODMs (Original Design Manufacturer) with server factories in both Wisconsin and Texas, along with an AI server R&D center in Texas, enabling it to quickly respond to changes in Trump’s tariff policies.

It is worth noting that Foxconn is constructing the world’s largest facility in Mexico for assembling NVIDIA’s GB200 superchips, a critical part of the U.S. company’s upcoming Blackwell family computing platform, according to a previous report by Reuters.

However, a senior executive from an unnamed electronics company cited by the report also warned that the burden of additional tariffs would ultimately fall on importers or customers, hinting that these costs might eventually be passed on to U.S. consumers, likening the move to a “self-damaging punch.”

Taiwanese PC Brands: on High Alert

On the other hand, Taiwanese PC brands such as ASUS, Acer, Gigabyte, and MSI, whose core products are primarily finished goods exported directly to the U.S., are likely to face significant risks, the Economic Daily News report adds.

According to the report, the U.S. is the largest global market for PCs, and while Trump has not explicitly mentioned tariffs on PCs or laptops, the market fears his tariff policies could target these products as well, substantially increasing cost pressures for these brands.

An unnamed industry insider cited by the report noted that if PCs and laptops are included in Trump’s tariff scope, short-term price hikes in the U.S. market as well as supply chain shifts in the long run may be inevitable.

Read more

• [News] Dell, Foxconn, and Quanta Reassure NVIDIA’s GB200 Shipments on Track Amid Overheat Rumors
• [News] Foxconn Expands Investment in the U.S., Mexico, India, and Europe, Approaching USD 840 Million

(Photo credit: Foxconn)