Will TSMC Challenge Intel’s Dominance?
24 March 2025 · Uncategorized ·
Source: · https://finance.technews.tw/2025/03/17/tsmc-intel-business/
Trump's "America First" policy, from an economic perspective, largely centers on prioritizing American semiconductor manufacturing.
Trump has repeatedly claimed that Taiwan has taken America’s chip business and should pay a protection fee to the U.S.; recently, he even suggested imposing tariffs on Taiwanese chips, potentially as high as 100%. This follows recent market impacts stemming from DeepSeek's activities, which have weakened TSMC's stock price.
Trump’s tariff tactics toward Taiwan appear surprising, especially considering that initial tariffs against strategic rival China started at 25%, and more recently applied to Canada and Mexico; yet he is now contemplating a direct jump of 100% for an ally like Taiwan.
His recent focus on steel and chip tariffs highlights the importance Trump places on controlling critical material industries within America, ostensibly for national security in potential conflict scenarios.
Trump’s intentions are evident at multiple levels: first, to encourage TSMC to expand its investment in the U.S. by increasing production capacity; second, to bring advanced processes and packaging technologies into the country; third, to relocate upstream supply chains within America, creating a complete chip manufacturing system.
The anticipated economic benefits include job creation—a central tenet of Trump’s policy agenda. The "America First" approach prioritizes American-made products, with semiconductor manufacturing as key, suggesting an underlying “Taiwan Priority” strategy: Taiwan assists in building the U.S.’s industrial supply chain in exchange for preferential treatment.
Trump's proposed tariffs on Taiwanese chips aim to compel TSMC into expanding its chip production capacity within the U.S., but given America’s existing semiconductor equipment, technology, talent, capital, design software and patents, such high tariffs seem unnecessary—suggesting a reliance on TSMC due to Intel’s limitations in advanced manufacturing.
The situation presents an awkward dynamic: akin to a gang leader relying on a subordinate while avoiding overt deference.
Ultimately, the subordinate still requires support from the superior; if TSMC actively cooperates and accommodates Trump's demands, it could create dependency that benefits Taiwan.
Furthermore, what Trump truly seeks is for TSMC not only to expand production capacity but also to revitalize Intel’s manufacturing capabilities—effectively guiding Intel toward producing high-end chips under TSMC’s expertise. However, investors are concerned about potential technology transfer diminishing TSMC's competitive edge.
The U.S. aims to regain control over critical industries and prepare for conflicts where strategic materials like Taiwan-made chips could be vital; ensuring domestic chip production is therefore crucial to national security in the current geopolitical climate.
Given America’s fundamental reliance on TSMC’s semiconductor expertise, high tariffs appear more as a bargaining tool than an ultimate solution—and sufficient incentives will likely follow.
TSMC's stock price should recover with increased global and local capacity leading to higher profits; Intel faces greater challenges due to its fragmented business model compared to the integrated approach of TSMC.
As AI drives demand for chips, both TSMC’s U.S. plants and investments in Intel stand to be profitable—allowing it to benefit from dual revenue streams.
The U.S., as a global superpower, prioritizes strategic material industries like steel and semiconductors domestically over imports due to national security concerns; the ambition is not just having American semiconductor companies but leading ones capable of competing with TSMC.
TSMC’s unique advantages are unlikely replicable—ensuring it will remain pivotal in guiding Intel's chip manufacturing efforts despite potential technology transfers.
Given this dynamic where America relies on Taiwan for critical support, reciprocal benefits should be expected; historically, justified reasons causing significant drops in TSMC stock prices have led to subsequent recoveries and surpassing previous highs due to its robust fundamentals unaffected by short-term market fluctuations.
TSMC’s shares are not only long-term investment tools but also serve as a reliable cash management tool for institutional investors during downturns—demonstrating that temporary dips do not undermine the company's competitive edge in semiconductor manufacturing.
In conclusion, while TSMC faces no immediate threats to its core business model and future prospects amidst AI-driven growth, Intel’s fragmented structure poses more risks.
Trump has repeatedly claimed that Taiwan has taken America’s chip business and should pay a protection fee to the U.S.; recently, he even suggested imposing tariffs on Taiwanese chips, potentially as high as 100%. This follows recent market impacts stemming from DeepSeek's activities, which have weakened TSMC's stock price.
Trump’s tariff tactics toward Taiwan appear surprising, especially considering that initial tariffs against strategic rival China started at 25%, and more recently applied to Canada and Mexico; yet he is now contemplating a direct jump of 100% for an ally like Taiwan.
His recent focus on steel and chip tariffs highlights the importance Trump places on controlling critical material industries within America, ostensibly for national security in potential conflict scenarios.
Trump’s intentions are evident at multiple levels: first, to encourage TSMC to expand its investment in the U.S. by increasing production capacity; second, to bring advanced processes and packaging technologies into the country; third, to relocate upstream supply chains within America, creating a complete chip manufacturing system.
The anticipated economic benefits include job creation—a central tenet of Trump’s policy agenda. The "America First" approach prioritizes American-made products, with semiconductor manufacturing as key, suggesting an underlying “Taiwan Priority” strategy: Taiwan assists in building the U.S.’s industrial supply chain in exchange for preferential treatment.
Trump's proposed tariffs on Taiwanese chips aim to compel TSMC into expanding its chip production capacity within the U.S., but given America’s existing semiconductor equipment, technology, talent, capital, design software and patents, such high tariffs seem unnecessary—suggesting a reliance on TSMC due to Intel’s limitations in advanced manufacturing.
The situation presents an awkward dynamic: akin to a gang leader relying on a subordinate while avoiding overt deference.
Ultimately, the subordinate still requires support from the superior; if TSMC actively cooperates and accommodates Trump's demands, it could create dependency that benefits Taiwan.
Furthermore, what Trump truly seeks is for TSMC not only to expand production capacity but also to revitalize Intel’s manufacturing capabilities—effectively guiding Intel toward producing high-end chips under TSMC’s expertise. However, investors are concerned about potential technology transfer diminishing TSMC's competitive edge.
The U.S. aims to regain control over critical industries and prepare for conflicts where strategic materials like Taiwan-made chips could be vital; ensuring domestic chip production is therefore crucial to national security in the current geopolitical climate.
Given America’s fundamental reliance on TSMC’s semiconductor expertise, high tariffs appear more as a bargaining tool than an ultimate solution—and sufficient incentives will likely follow.
TSMC's stock price should recover with increased global and local capacity leading to higher profits; Intel faces greater challenges due to its fragmented business model compared to the integrated approach of TSMC.
As AI drives demand for chips, both TSMC’s U.S. plants and investments in Intel stand to be profitable—allowing it to benefit from dual revenue streams.
The U.S., as a global superpower, prioritizes strategic material industries like steel and semiconductors domestically over imports due to national security concerns; the ambition is not just having American semiconductor companies but leading ones capable of competing with TSMC.
TSMC’s unique advantages are unlikely replicable—ensuring it will remain pivotal in guiding Intel's chip manufacturing efforts despite potential technology transfers.
Given this dynamic where America relies on Taiwan for critical support, reciprocal benefits should be expected; historically, justified reasons causing significant drops in TSMC stock prices have led to subsequent recoveries and surpassing previous highs due to its robust fundamentals unaffected by short-term market fluctuations.
TSMC’s shares are not only long-term investment tools but also serve as a reliable cash management tool for institutional investors during downturns—demonstrating that temporary dips do not undermine the company's competitive edge in semiconductor manufacturing.
In conclusion, while TSMC faces no immediate threats to its core business model and future prospects amidst AI-driven growth, Intel’s fragmented structure poses more risks.