Taiwan Semiconductor Manufacturing (TSM) looked to be in the crosshairs of the White House after U.S. President Donald Trump floated at least 25% tariffs on chip imports, signalling he is not backing down from his belief that Taiwan “stole” America’s chip industry.
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Speaking on Tuesday from his Mar-a-Lago club, he said the administration would likely impose tariffs on automobile, semiconductor and pharmaceutical imports of around 25%.
Auto imports would face a tariff of 25% with an announcement due on April 2nd, the President said. Asked about levies on pharmaceutical drugs and semiconductors, he replied, “It’ll be 25% and higher, and it’ll go very substantially higher over a course of a year.” Shares of TSMC in Taiwan fell close to 1% on Tuesday.
Trump recently ordered an investigation of other nations’ tariff and tax policies in search of a more “balanced” trading relationship which he said could see new reciprocal tariffs take effect as soon as April 2nd, the day after the investigation is due to report.
Is TSM the Target?
Trump didn’t specify whether companies that produce goods in the U.S. would be spared, however, Taiwan’s semiconductor industry has come under fire from the White House recently.
Last week Trump said the country “took our chip business away” and vowed to bring the business “back in the US.” The comments prompted Taiwan President Lai Ching-te to pledge to increase procurement and investment in the U.S.
“When they come into the United States and they have their plant or factory here there is no tariff, so we want to give them a little bit of a chance,” Trump added in his remarks yesterday, suggesting that companies which produce sufficiently in the U.S. may be spared.
TSM is the world’s largest semiconductor chipmaker and a key plank in Taiwan’s export economy. The U.S. trade deficit with Taiwan rose by more than half, jumping $26.1 billion to $73.9 billion last year thanks to the huge demand for semiconductors, most of which are manufactured by TSM.
TSM Invests in the U.S.
However, it has taken steps to ease pressure from previous U.S. administrations, committing $65 billion to build three plants in Arizona, which when completed should produce about a fifth of the company’s output of chips.
As well as TSM, new chip tariffs could hit South Korea’s Samsung (SSNLF) and SK Hynix, whose manufacturing plants are largely in Asia.
It comes after Bloomberg reported that TSM was considering acquiring a controlling stake in Intel’s (INTC) U.S. factories at the request of President Trump. However, a White House official told Reuters that the President was “unlikely” to back a foreign company running Intel’s factories.
Is TSM a Good Stock to Buy?
Wall Street has a Strong Buy consensus rating on TSM stock, based on five Buys and one Hold rating. The 12-month average TSM price target of $246.14 implies about 21% upside.
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