Trump's tariff hike on chips seeks to force TSMC negotiations: Experts

Taipei, Feb. 9 (CNA) Three experts in the high technology industry have said that U.S. President Donald Trump's recent pledge to impose higher tariffs on Taiwanese semiconductors represents an effort to force Taiwan Semiconductor Manufacturing Co. (TSMC) to the negotiating table.

In a speech to Republicans on Jan. 27, Trump said he intends to impose tariffs on Taiwan to bring chip production to the United States. "The incentive is going to be they're not going to want to pay a 25, 50, or even a 100 percent tax," he said.

Asked to comment, Darson Chiu (邱達生), director-general of the Taipei-based Confederation of Asia-Pacific Chambers of Commerce and Industry and an economics professor at Taichung-based Tunghai University, told CNA Saturday that TSMC's orders are currently at full capacity, especially with the rise of AI, where demand for high-end chips exceeds supply and there are no viable substitutes.

This means that TSMC is a price setter in the market, rather than a price taker, Chiu said. As a result, the more tariffs imposed on TSMC chips, the higher the costs U.S. importers will have to bear, which could lead to inflation and ultimately be passed on to domestic consumers.

Chiu added that unlike the U.S. tariffs on Chinese products such as plastics, where importers can switch to suppliers from countries like Vietnam, "TSMC's chips cannot be easily replaced, even Intel struggles to produce them."

Eventually, U.S. importers will have no choice but to pay the higher tariffs, he said.

Given that Trump's advisors are highly respected economic scholars, who would certainly not introduce a tariff policy without having considered its impact on the competitiveness of the U.S. AI sector, Chiu believes what Trump really wants is to force TSMC to the negotiating table.

Meanwhile, Hsieh Chin-ho (謝金河), chairman of Wealth Magazine, told reporters in Taipei Saturday that he believes Trump simply hopes to pressure TSMC into increasing its investment in America with the tariff threat.

He suggested that TSMC, the world's largest contract chipmaker, extend goodwill toward the Trump administration.

Sharing a similar view, Tim Culpan, a Taipei-based former Bloomberg Opinion columnist covering technology in Asia, said in an online opinion piece on Friday that if Trump goes further than stand-alone chips and adds import duties to a broader category of semiconductor products including GPUs, modules and subsystems, then the results could be "disastrous."

"The U.S. doesn't have the capacity to manufacture anywhere near a similar volume of equivalent devices. It would take months, if not years, to build the factories, spin up the tools, and then go through the qualification process," he wrote in the article titled "How a TSMC Tax Would be a FAFO Move for the US."

In the opinion piece, Culpan argues that the U.S. could impose a tax on Taiwanese chips, but it would hurt the very companies Trump used to bolster his tech credentials.

Culpan said TSMC will not be the one to suffer most if Trump does imposes the tariff hike.

"The company is capacity constrained in advanced-packaging for AI chips and clients have no other choice," he wrote.

"In fact, the biggest victims would be the three men who so proudly and obsequiously fawned over the new president the first full day he was in office: Larry Ellison, Sam Altman, and Masayoshi Son," he noted.

Ellison, Altman and Son head Oracle, OpenAI and SoftBank Group, respectively.

"What I think Trump really wants is for TSMC to kiss the ring and pledge to invest more in the US," he wrote.