Stocks in TSMC skyrocket by 4.9%, reaching a new high, following Trump's announcement of tariff exemption
In a significant development, Taiwan Semiconductor Manufacturing Company (TSMC) has announced its plans to invest heavily in the United States, with a focus on semiconductor manufacturing and advanced chip production. The company's U.S. expansion, primarily in Arizona, is set to reach approximately $165 billion, with the aim of producing highly advanced 2nm and beyond chips, including those for AI and high-performance computing applications.
The news comes after U.S. President Donald Trump announced an exemption for TSMC from a 100% tariff on chip imports, a move aimed at reducing U.S. dependence on imported chips and cutting into large U.S. trade and federal government deficits. This exemption means most cutting-edge chips will enter the U.S. tariff-free, including key AI accelerator chips and HBM (high bandwidth memory) chips needed in AI servers.
TSMC's vice chairman, F.C. Tseng, is estimated to be worth $1.5 billion, and the company's chairman, C.C. Wei, has announced plans to increase the company's U.S. investment by $100 billion in the next five years, bringing its total American investment to $165 billion. TSMC's market capitalization is more than $1 trillion, and its shares closed up by 4.9% at the Taiwan Stock Exchange to 1,180 New Taiwan dollars on Thursday.
While Arizona as a state is expanding its clean energy initiatives and solar industry, driven by companies like Meyer Burger and JA Solar, TSMC's role in Arizona is concentrated on semiconductor fabs and associated technology infrastructure, not solar panel manufacturing or solar energy projects.
The tariff policy may provide help for U.S. industries feeling their chip supplies are at risk. In addition to TSMC, the exemption also applies to other foreign chipmakers like Samsung that have announced investment plans in the U.S. In response, TSMC's U.S.-listed ADRs rose by 4.9% to $242.62 on Thursday following the Trump announcement.
Interestingly, ForbesTaiwan's Biggest Silicon Wafer Maker (GlobalWafers) is considering investment in the U.S. solar industry, suggesting a potential shift in focus for some companies in the semiconductor industry. However, TSMC's expansion plan remains centred on semiconductor and AI chip production, not on investments related to the solar industry.
The new semiconductor tariff policy may be less friendly to smaller overseas chipmakers that don't produce chips stateside. In South Korea, shares in Samsung Electronics rose by 2.5%, and SK Hynix, another South Korean company, gained 1.5% today.
In a positive sign for TSMC, the company hit a record high in Taipei on Thursday due to the tariff exemption announcement. In addition, shares in GlobalWafers, a supplier of silicon wafers, soared by nearly 10% to NT$375.
In conclusion, TSMC's U.S. expansion plan is centred on semiconductor and AI chip production, not on investments related to the solar industry. The Arizona solar industry does have significant activity, but TSMC is not reported to be part of that sector. The tariff exemption provides a significant boost to TSMC and other foreign chipmakers investing in the U.S., potentially helping to secure the U.S.'s chip supply and reduce trade deficits.
Morris Chang, former chairman of TSMC, might be interested in the subsequent development as TSMC, under the leadership of F.C. Tseng, plans to expand its business in the technology sector, particularly focusing on semiconductor and AI chip production in the United States. This move could impact key players like Intel, Apple, Nvidia, and Samsung, as well as regional players such as Triorient and Sk Hynix. The financial implications of this expansion, along with the tariff exemption, could significantly affect the global finance market.
