Analysis: Trump Targeting Taiwan’s Chips Dangerous for Taiwan, U.S. Businesses

TaiwanPlus News

As the United States reportedly moves to ask Taiwan's chip giant TSMC to open a joint venture with Intel or face tariffs, Neumonda COO Marco Mezger warns of the potential downsides ahead for businesses in both countries.

Transcript

00:00The United States is reportedly asking TSMC and Intel to start a joint venture or TSMC

00:08face tariffs for their semiconductors.

00:11What is your opinion about this reporting?

00:14I think when I heard the first time about the potential tariffs on TSMC, I was actually

00:19quite surprised because I think we need to understand when you put the tariffs on, you

00:25know, and I think they said it on a broader base on semiconductor, but you need to divide.

00:30So you basically you have chips, you have kind of subsystem and you have computing systems.

00:38And so it has not been really clear what is exactly targeted.

00:42But one thing what I can tell you, all three would affect American companies to a quite

00:48big extent.

00:50We are talking now about roundabout 50, 55 billion U.S. dollars, which could be affected.

00:56So it's not clear what the Trump administration wants to put the tariffs on, pure chips, modules

01:03or full systems.

01:05And because these semiconductors are so vital to the economy and everyday technology, ultimately

01:12North American businesses will still need these semiconductors.

01:17So what can TSMC do in the instance of tariffs?

01:21Will they pass the cost down to consumers?

01:24I think they will pass the tariffs down to the consumers.

01:28They cannot suck this up.

01:30So I think the point is, like, if there are tariffs which will be imposed, the end customer

01:36is normally the ones who has to pay the bill.

01:39And especially, you know, if there are no alternative to produce, and I have to say

01:45on large scale in the USA.

01:47So USA with the TSMC perhaps with the committed investment, which have been also attracted

01:53by the CHIPS Act from the USA.

01:56Now, recent reports basically say that the Trump administration potentially might also

02:05change some of the regulations looking forward, but potentially also backward.

02:11And I think this would be a bad sign.

02:13Because I think if companies make this decision based on a government statement, they rely

02:19on this because without these incentives, they probably would not have decided to build

02:25up a factory there.

02:27Because it's higher cost, higher labor cost.

02:29TSMC will not be the only company affected by these proposed tariffs.

02:35There are other smaller but still vital semiconductor manufacturers in Taiwan.

02:41How would these other companies who do not have the weight that TSMC does react?

02:45I mean, these companies, I really feel sorry for them.

02:49Because you are talking about companies, they have major process nodes.

02:52I mean, there I would use the term major process nodes about 20 nanometer, 25, 30 nanometer,

02:59which is which is used here, you have on another front, extreme competition from China, because

03:06China has no access to the newest cutting edge technology.

03:10As you know, they cannot get UV technology.

03:13But they find a way, for example, for DUV technology.

03:17Now when the Taiwanese companies now, in addition to this, are also faced with additional tariffs,

03:26you know, moving to the USA or serving US customers, I think it's a lot of pressure

03:32for them.

03:33It's a huge challenge.

03:34I cannot imagine that it would make so much sense, you know, to to build up major process

03:42node factories in the USA on large scale.

03:46Not only because of the questioning, you know, of the just focusing on this in the USA, but

03:52also knowing how much capacity has been built up the last three years in China.

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