Saddled with restrictions on access to semiconductor imports and fresh tariffs on exports, China is bristling at the prospect of Taiwan Semiconductor Manufacturing Co (TSM) the world’s largest contract chipmaker, being handed over to the United States.
Beijing accused Taiwan of trying to “sell out” its companies, giving them away as “souvenirs” to curry favor with the White House, according to a Reuters report, amid accusations from President Donald Trump that the island nation had stolen U.S. chip industry.
Citing a news conference in Beijing, the news agency reported that China’s Taiwan Affairs Office said the ruling Democratic Progressive Party had used Taiwan’s “semiconductor industry and powerful companies to get a foot in the door to relying on foreign countries to seek independence.”
Taiwan Under U.S. Pressure over Chips
Earlier this month Trump said Taiwan “took our chip business away” and vowed to bring the business “back in the US,”, prompting Taiwan President Lai Ching-te to pledge to increase procurement and investment in the U.S.
It comes amid escalating tensions over tariffs and Washington’s fear about China accessing advanced chips used for artificial intelligence.
The U.S. trade deficit with Taiwan jumped more than half last year, rising $26.1 billion to $73.9 billion thanks largely to surging demand for semiconductors, most of which are manufactured by TSM, which makes semis for the likes of Apple (AAPL) and Nvidia (NVDA).
Trump ordered an investigation of other countries’ tariff and tax policies, which he said could see new reciprocal tariffs take effect as soon as April 2nd, which could include 25% tariffs on chips.
At same time, there have been reports that the White House is seeking to tighten Biden-era restrictions on chip sales to China and elsewhere. Reports have also centered on rumours that TSM has been in talks to take a stake in Intel (INTC).
Trump Offers Tariff Relief
Trump has pushed countries and companies to bring manufacturing back to the U.S. using the threat of tariffs as a stick. “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,” he said.
Taiwan’s President Lai Ching-te said the country would “increase investment in the US and purchases from it to balance bilateral trade.” TSM has already committed $65 billion to build three plants in Arizona, which when completed will produce about a fifth of the company’s output of chips.
According to Reuters, Zhu Fenglian, spokesperson for China’s Taiwan Affairs Office, suggested the Taiwanese people were worried TSMC could become “United States Semiconductor Manufacturing Co.”
Is TSM a Good Stock to Buy?
Overall, Wall Street has a Strong Buy consensus rating on TSM stock, based on five Buys and one Hold. The average TSM price target of $245.00 implies around 25% upside, with the stock up 50% in the last year.
