Taiwan Semiconductor Manufacturing Company (TSMC) acknowledged on Tuesday that U.S. tariffs have influenced its operations, although the company emphasized that robust demand for artificial intelligence (AI) continues to exceed supply.
Since the implementation of U.S. President Donald Trump’s trade policies, uncertainties in the global semiconductor sector have increased. TSMC, recognized as the leading manufacturer of advanced semiconductors, serves high-profile clients such as Apple and Nvidia.
During the company’s annual shareholders meeting in Hsinchu, Taiwan, Chief Executive C.C. Wei stated that there has been no noticeable change in customer behavior linked to tariff-related uncertainties, adding that clarity on the matter may emerge in the coming months.
“Tariffs impact TSMC indirectly. They are primarily imposed on importers, and as an exporter, we do not bear the direct burden. However, such tariffs can lead to increased prices, which might cause demand to decrease,” Wei explained.
“Should demand wane, TSMC’s business could face challenges. Nonetheless, I can confirm that interest in AI remains exceptionally strong and consistently surpasses our supply capabilities,” he stated.
In April, the world’s largest contract chipmaker expressed an optimistic outlook for the year, driven by surging demand for AI technologies.
Wei noted that TSMC has held discussions with the U.S. Department of Commerce regarding tariffs, voicing concerns that these measures could raise production costs in the U.S. As part of its investment strategy, TSMC plans to allocate $165 billion (approximately Rs. 14,10,082 crore) for constructing new factories, some of which rely on equipment sourced from U.S. suppliers manufactured in Asia.
“The U.S. commerce department has indicated that this topic is open for dialogue, though the timeline for resolution is uncertain,” Wei remarked. “The key takeaway is that we are maintaining active communication, as understanding is crucial to recognize the ramifications of these tariffs.”
Wei also informed Trump that fulfilling the additional $100 billion (around Rs. 8,54,595 crore) investment pledged alongside the president in March would be challenging within a five-year timeframe.
“He responded, ‘Mr. Wei, do your best; that’s good enough,'” Wei recalled.
In response to inquiries regarding the company’s potential plans to establish chip production facilities in the United Arab Emirates, Wei dismissed the notion, stating that TSMC currently has no intentions to operate in the Middle East due to a perceived lack of customer demand in the region.
On the domestic front, TSMC is facing margin pressures stemming from the recent strength of the Taiwan dollar, which Wei noted has contributed to a decline in gross margin by over three percentage points.
Additionally, TSMC must navigate broader geopolitical risks, particularly as China intensifies military pressure on Taiwan, which it considers a vital part of its territory.
“Any adverse developments are largely beyond TSMC’s control; such matters rest with governmental authorities,” Wei stated when asked about potential crises in the Taiwan Strait.
© Thomson Reuters 2025
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