The U.S. relationship with Taiwan is unique. Geostrategically, they stand together in opposition to China. However, the current U.S. administration appears determined to take whatever steps are necessary to regain the semiconductor manufacturing dominance it lost in the mid-1980s. Taiwan stands in the way—a major one. After all, TSMC, the world’s largest chipmaker, is a Taiwanese company.
Taiwan’s Stock Market Is Already Plummeting
Trump and his allies aim to develop full domestic production of cutting-edge chips that currently come primarily from Taiwan, and to a lesser extent, South Korea. A large share of AI GPUs developed by Nvidia, AMD, Cerebras, and Amazon are manufactured at TSMC’s world-class facilities in Taiwan.
The new U.S. tariffs aim to pressure TSMC, UMC, and other Taiwanese firms into relocating their production to the U.S. to avoid trade penalties. TSMC is already building several advanced fabs in Arizona, one of which is nearing large-scale production. Still, the tariff announcement has already hit key Taiwanese firms hard—especially TSMC and Foxconn.
Taiwan’s stock market plunged nearly 10% following Thursday’s announcement of a 32% tariff. According to Reuters, the move triggered widespread investor selloffs in tech stocks. TSMC and Foxconn took some of the worst hits.
And they aren’t just any two companies. Chips are critical to Taiwan’s economy. TSMC is the crown jewel of the global chip industry, and Foxconn leads the world in consumer electronics manufacturing. Foxconn plays a central role in the supply chains of Apple, Sony, Nintendo, Microsoft, HP, Dell and others.
The Taiwanese government has created a $2.65 billion fund to assist companies most affected by the U.S. tariffs. President Lai Ching-te has pledged to strengthen economic ties with Washington in hopes of eliminating tariffs between the two nations. The outcome remains uncertain, but several economic analysts warn that Taiwan may enter a recession in the short term.
Image | TSMC
Related | U.S. Tariffs Are a Tech Industry Wrecking Ball—Except for Chinese Phones
The post U.S. Tariffs Are Already Affecting Two Companies That Are the Backbone of Taiwan’s Economy: TSMC and Foxconn appeared first on Xataka On.
