TSMC hits back, warns U.S. of consequences of semiconductor tariffs

Taipei, May 23 (CNA) Taiwan Semiconductor Manufacturing Co. (TSMC) has warned the United States that any future tariffs on Taiwanese semiconductors could reduce demand for chips and derail its pledge to increase its investment in Arizona.

"New import restrictions could jeopardize current U.S. leadership in the competitive technology industry and create uncertainties for many committed semiconductor capital projects in the U.S., including TSMC Arizona's significant investment plan in Phoenix," the chipmaker wrote in a letter to the U.S. Department of Commerce.

TSMC issued the warning in response to a solicitation for comments by the department on a possible tariff on semiconductor imports by the Trump administration, which launched an investigation under Section 232 of the Trade Expansion Act of 1962.

TSMC confirmed to CNA on Thursday that TSMC Arizona Corp., its subsidiary in the United States, made the comments in the letter dated May 5, but it declined to elaborate on the letter's contents.

Taiwan's government and companies have been extremely reluctant to date to voice any criticism of the Donald Trump administration's chaotic tariff rollout, but the TSMC letter made the case that going through with them would have negative consequences.

In the letter, TSMC said any import measures adopted by the U.S. government "should not create uncertainties for existing semiconductor investments," referring to its huge investments in Arizona.

TSMC is currently investing US$65 billion to build three advanced wafer fabs in Arizona. The first one has begun mass-producing chips, construction of the second fab is nearly complete, and a groundbreaking ceremony was held for the third fab last month.

In March, TSMC pledged an additional US$100 billion of investment in Arizona over the next few years to build three more wafer fabs, two packaging and testing plants and one research and development center to bring the total investment to US$165 billion.

TSMC said in the letter that the successful and timely completion of its Arizona project depended on the company's expectation of growing demand for its production manufacturing capacity and services from its leading U.S. customers.

However, "tariffs that raise the cost of end consumer products will lower demand for such products and the semiconductor components they contain," the chipmaker said.

"Therefore, TSMC respectfully requests that any remedial import measures imposed resulting from this investigation not extend to downstream end products and semi-finished products containing semiconductors," the company said.

TSMC said that in terms of both quantity and quality, a considerable amount of imported semiconductor manufacturing equipment and materials are not currently available in the U.S. market.

It stressed that any project to accelerate the development of semiconductor production clusters in the U.S., such as its Arizona plan, will be critical to creating the demand necessary for further supply chain investments and producing more equipment and materials domestically in the U.S.

"At a minimum, any tariffs or other import restrictions should be imposed with realistic adjustment times for TSMC Arizona and other U.S. businesses and investors who have already committed to substantial U.S. semiconductor production," TSMC said.

"This would include ensuring continued tariff-free access to inputs where local sourcing is unavailable or unfeasible or will take time to onshore, particularly from longstanding suppliers within the ecosystem," TSMC added.

According to TSMC, after its project is fully online, TSMC Arizona is expected to roll out 100,000 wafers a month, "making it a GIGAFAB cluster."

TSMC said Arizona will eventually account for about 30 percent of the company's total global capacity of sophisticated 2 nanometer process and more advanced technology nodes.

Trump has threatened to impost tariffs of up to 100 percent on semiconductors from Taiwan, repeatedly claiming Taipei "stole" the chip business from Washington.

Though the Trump administration has said it was negotiating dozens of deals with countries threatened with high tariffs, it recently suggested it did not have the capacity to complete such deals and would therefore simply tell trading partners the tariff rates applied to their goods.