TSMC is riding high with the surge in demand for AI chips, and it’s safe to say the Taiwanese semiconductor giant is one of the biggest beneficiaries of the AI boom. The company’s ability to meet the insatiable demand for cutting-edge chips, from AI to advanced packaging, has made it a key player in the tech space. However, there’s a dark cloud on the horizon: US chip tariffs could deliver a serious blow to TSMC’s operations. Despite its impressive growth and global dominance, TSMC’s future could be jeopardized if the US government enforces tariffs on Taiwan, with President Trump showing support for such a move. Trump has repeatedly claimed that Taiwan has stolen US chip technology, and as part of his presidential campaign, he’s pushed for tariffs on Taiwanese semiconductors. 
The administration’s stance could be devastating for TSMC and the entire supply chain that relies on Taiwan for next-gen chips.
To mitigate this risk, TSMC has been making significant investments in the US. The company has pledged over $100 billion to build new chip and packaging facilities in America, which would make the US a secondary production base to Taiwan. The idea is that US-based production could help TSMC avoid some of the punitive tariffs that could be levied on Taiwan-based manufacturing. Commerce Secretary Howard Lutnick recently stated that while the ultimate decision on chip tariffs rests with President Trump, companies that invest in US manufacturing could receive more leniency in tariff rates. The trade-off is clear: build in America, and the tariff burden could be less severe. But even with this strategy, a tariff as low as 10% could still hurt TSMC’s ability to maintain its supply chain and operational efficiency.
TSMC’s customers, including major players like Apple and NVIDIA, would also be affected by any tariff increases. The extra cost could be passed on to consumers in the form of higher product prices, or companies could absorb the shock by taking a hit on their margins. With the August 1st deadline fast approaching for the administration to introduce any new chip tariffs, TSMC and its partners are on edge, waiting to see what comes next.