Secondly, tariffs can only make foreign companies start producing chips in the US if it becomes cheaper than doing it elsewhere. But the higher labor cost of the United States and the lack of a sophisticated semiconductor supply chain means that the production will take for many years, if not for decades, and there is little guarantee that such outposts of the United States will be profitable. Faced with our tariffs, it may be more meaningful to Taiwanese companies like TSMC simply transferring production to a third country instead to avoid paying them.
But the Trump administration can choose to expand tariffs for all countries, effectively producing in the United States is the only feasible replacement. It can replace tariffs on any last product containing Taiwan's chips.
The second idea will create a significant disruption for the semiconductor industry. A single smartphone may have dozens of chips inside are responsible for a variety of functions; A car is capable of thousands of. Find out which components among them have components from Taiwan, how much taxes should be taxed and how difficult it is to find alternatives to the final product companies.
Semiconductors are likely to not prepare for such a scenario, especially because their products are mainly forgiven from past tariffs. The industry around the world has never handled chip tax rates like this before, he said a person in the semiconductor industry is based in Taiwan, the publisher of public comments according to the alias HSU Mei-Hu. Theoretically, it is possible, but almost impossible in reality.
This policy will force companies like Apple to ask all their suppliers about the cost of many types of chips they use, only to determine the appropriate tax rate to declare. And after being declared, how do customs check it? If I only put a random value down, how will the customs know? HSU said.
The Biden government previously discussed the use of component tariffs on Chinese chip manufacturers to weaken the country's semiconductor industry and protect the US national security. But one of the main arguments against the idea is that it will be difficult to implement in terms of logic, Miller said.
Miller said that component tariffs are definitely being considered in Washington this time, but it will be even more difficult to execute them for Taiwan's chip imports because they play a broader and more important role than the Chinese chip. If you are interested in the administrative complexity of component tariffs that are only China, you must pay more attention to the complexity of administration, he said.
The largest loser
TSMC will lose less from the potential tariffs of the United States compared to other companies due to the unrivaled weight in the industry. TSMC currently accounts for about 90 percent of the most advanced chips worldwide and its production line is currently operating at full capacity. If Trump increases taxes and forcing TSMC to increase prices, the company may lose some orders for competitors, but experts say that it is not really a great concern.
But it may be difficult for TSMC customers to quickly find alternative options. Although companies like Samsung and Intel have gained an equivalent understanding in the production of high -end chips to some extent, it will be very time -consuming, expensive and risky to transfer mature production processes from TSMC factories. So, instead of going to another chip manufacturer, US companies like Apple and NVIDIA are likely to continue receiving invoices for TSMC products and eventually transferring higher costs to their customers.