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.

Read more

• [News] With Trump’s Odds of Winning Rising, Concerns Arise on Potential Adjustments in Chip Subsidies
• [News] TSMC Receives USD 6.6 Billion for Chipmaking from the US Government, Commits to Constructing Third Fab

(Photo credit: TSMC)

China’s exports showed a significant rebound in October, according to data released by the General Administration of Customs of the People’s Republic of China (GACC) on November 7, marking the highest growth rate since July 2022.

The total export value, measured in USD, reached approximately $309 billion, reflecting a year-on-year increase of 12.7%, well above the previous month’s 2.7% growth. Imports totaled around $213.34 billion, representing a 2.3% year-on-year decline, which was a notable improvement compared to the 7.2% drop in the prior month. The trade surplus stood at $96 billion, the third-highest monthly record.

By destination, exports to the United States rose by 8.1% year-on-year, up 2.2% from the prior month, while exports to the European Union grew by 12.7%, driven in part by a rush to export ahead of anticipated trade barriers.

On the product level, crude oil imports declined by 9% year-on-year, marking the sixth consecutive month of decline, indicative of weak domestic demand. Steel exports surged by 24.4%, showing a 13.1% increase over the prior period, pointing to excess production capacity in China’s industrial sector. Electronic exports, China’s largest category to the U.S., increased by 13.7% year-on-year, expanding by 10.7% from the previous month, though mobile phone exports declined by 0.7%, the only decline within the electronics segment.

In summary, expectations of higher tariffs on Chinese goods by the incoming U.S. administration and rising trade barriers against Chinese steel and electric vehicles have driven Chinese exporters to accelerate shipments. While this may support GDP growth, reliance on exports alone is unlikely to resolve broader economic challenges.

November 8 marks the final day of the National People’s Congress Standing Committee session, with markets closely watching for potential policy measures aimed at boosting domestic demand.

Read more at Datatrack

• Agenda47 | Donald J. Trump
• Upside risks have increased in toss-up US election

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(Photo Credit: Donald J. Trump Facebook)

Recent comments from former U.S. President Donald Trump on protection fees have hit semiconductor stocks hard and brought TSMC back into the spotlight for investors.

As per a report from Barron’s, it’s suggested that America’s stance towards Taiwan is not the best diplomatic strategy. The following key figures highlight TSMC’s importance to both the U.S. and the global economy.

• 700 Billion

After Bloomberg published an exclusive interview with Trump, the Nasdaq Composite Index plummeted 2.8% on July 17th. Large semiconductor stocks, including TSMC and the seven major U.S. tech giants, collectively lost about USD 700 billion in market value overnight.

The report from Barron’s suggested that this phenomenon indicates that the market views TSMC not just as a foundry but also as a crucial supplier of key components for America’s largest and most important enterprises.

• 92%

According to the Semiconductor Industry Association, TSMC manufactures 92% of the world’s advanced semiconductors, while South Korea produces the remaining 8%.

Barron’s noted that though the U.S. aims to increase domestic production of advanced chips, targeting 20% of advanced chips to be produced locally by 2030,. However this will take some time to achieve.

• 33%

TSMC taks pride in itself that it is the world’s first dedicated semiconductor foundry. Namely, all chips produced by TSMC are supplied to semiconductor companies that do not manufacture their own chips. For companies like NVIDIA, AMD, Broadcom, Qualcomm, and others, TSMC is a major supplier.

Barron’s noted that approximately one-third of their chip manufacturing expenses go to TSMC. This has further underscored the significance of the company.

• 45%

NVIDIA and other companies purchase chips from TSMC and then resell them to other companies. According to Barron’s, Microsoft, Meta, Alphabet, Amazon, and Tesla contribute about 45% of NVIDIA’s sales. Although Apple currently doesn’t purchase many chips from NVIDIA, about 27% of Qualcomm’s sales and 17% of Broadcom’s sales come from Apple.

In theory, without TSMC, there would be no iPhone, AI servers, or other electronic products people rely on. For this reason, Tae Kim, a technology journalist at Barron’s, refers to the true risk of disruptions in TSMC’s operations as a “Global Depression.”

Read more

• [News] TSMC Dominates High-End Packaging Market, Potentially Impacting Opportunities for OSAT
• [News] TSMC Introduces “Foundry 2.0” to Include Packaging, Testing, Mask making and Others

(Photo credit: TSMC)

As former U.S. President Trump has brought up the topic that Taiwan should pay for protection, raising concerns on cross-strait issues at the same time, Taiwan’s semiconductor industry and its foundry leader, TSMC, have once again draw market attention. Some scholars believe that the U.S. must realize that Taiwan is not a competitor but an important fabless partner, which could not only play a crucial role in advancing the development of next-gen technologies in the U.S., but help the nation to win the U.S.-China tech battle.

Citing Chien-Huei Wu, a research fellow of the Institute of European and American Studies at Academia Sinica, a report from Technews points out that while profits for foundries have significantly increased in the past five years, it is the IC design sector that gains the largest share of value in the entire supply chain. The benefits to foundries are not particularly significant.

Wu further notes that when NVIDIA, AMD, and Apple place orders, TSMC provides the best service, which indicates that the semiconductor industry in Taiwan is not the only major beneficiary, but U.S. IC companies and the American semiconductor industry as a whole.

U.S. Emerges as the Biggest Winner while Outsourcing Wafer Manufacturing to Taiwan

“The U.S. must recognize that without Taiwan providing better services and designing better processes to overcome limitations, its semiconductor industry would find it difficult to make progress continuously,” said Wu.

Wu believes that the relationship between Taiwan and the U.S. involves high-level cooperation in the supply chain, with each playing its respective role. This is why TSMC founder Morris Chang has repeatedly emphasized that TSMC is a service provider, a trustworthy and reliable partner.

Additionally, the outsourcing of the semiconductor industry is an inevitable trend. Look back in history: the industry had moved from Europe and the U.S. to Japan. Then the Reagan administration sought to suppress the Japanese semiconductor, leading to the signing of the U.S.-Japan Semiconductor Agreement in 1986, while TSMC was founded the following year (1987).

And the history seems to repeat itself. Even after more than forty years, the U.S. has struggled to prevent the industry’s relocation. Now, Taiwan and South Korea have taken the lead in the semiconductor manufacturing business, and there are reasons for this.

Wu further explains that the work cultures between the Europe, the U.S., and Asia are entirely different, and these differences in technology, personnel, and culture will all increase manufacturing costs. Furthermore, these hidden costs will have to be absorbed by American consumers, which will inadvertently increase U.S. inflation. The situation not only harms American consumers but also hinders the country in the competition of next-generation advanced technologies.

The U.S. May be More Concerned about TSMC’s Tech Reaching China than Whether the Wafers are “U.S.-made.”

Currently, the market is concerned that Trump might impose a 10% tariff on all imported products if he takes office. According to Wu, the purpose of the tariff is to protect American manufacturers, making consumers more inclined to choose American-made products at the same price level.

“But the premise is that the quality must be the same, and that there must be existing American manufacturers.” He believes that the U.S. currently lacks manufacturers of equivalent quality, as U.S. tech giants, including Intel, place orders with TSMC, which indicates that the tariff may not have the intended effect. If an additional 10% tariff is imposed, products from major companies like NVIDIA, AMD, and Intel will become more expensive, increasing U.S. inflation, which benefits no one.

If this happens, Wu suggests that TSMC could organize manufacturers into a lobbying group, including key players from both Taiwan and the U.S., to expand the impact of the tariffs to the American semiconductor industry.

Furthermore, he notes that the Taiwanese government must work more closely with the industry, acting as a mediator in times of conflict. With both sides maintaining a unified stance, the government should prioritize industry interests in its communications.

In addition to tariffs, the U.S. government is also very concerned about the share of TSMC’s high-end chips going to China, especially with the escalation of the U.S.-China trade war.

Regarding this, Wu comments that as Taiwan’s current technological controls on the flow of technology to China are still in early stages, it will be difficult to convince the U.S. that it is a reliable partner and service provider. Therefore, the Taiwanese government must enhance its efforts to control the flow of high-tech, talent, products, or intellectual property to China, as there is still significant room for improvement.

How Should Taiwan’s Semiconductor Industry Handle U.S.-China Geopolitical Tensions?

Regarding Trump’s views on cross-strait politics, Wu analyzes that he is different from typical Western politicians, as Trump is known for his transactionalism, unilateralism, and personal connections. Namely, he is more concerned with “What’s in it for me (Trump)?” or “What’s in it for the U.S.?”

From Trump’s perspective, maintaining order is no longer an U.S. obligation. Taiwan must protect its own country with its own efforts, including maintaining a certain defense budget.

Additionally, it is worth watching whether Trump’s chip policies aim to relocate the entire semiconductor supply chain from Taiwan to the U.S. Although this poses practical difficulties and is economically unfeasible, Taiwanese government and the semiconductor industry must prepare for the worst-case scenario, and starts policy planning in advance.

Read more

• [News] With Trump’s Odds of Winning Rising, Concerns Arise on Potential Adjustments in Chip Subsidies
• [News] TSMC Maintains Overseas Expansion Strategy, Unfazed by Geopolitical Disruptions

(Photo credit: TSMC)