Cost of semiconductor chip manufacturing has increased drastically over the years for several reasons. Now, President Donald Trump recently vowed to impose sector-specific tariffs on chips. Trump has planned to impose nearly 25 percent to 100 percent tariffs on Taiwan-made chips. This will impact many industries and companies including TSMC (Taiwan Semiconductor Manufacturing Company). TSMC could increase prices of chip production to combat the imposed tariffs, suggests a report by Commercial Times.
TSMC could increase chip production prices by up to a massive 15 percent
According to industry insiders, Taiwan’s TSMC is considering increasing the costs of chip production by up to a whopping 15 percent. It is much higher than the originally proposed increase of nearly five percent. Sources suggest that these price hikes will help TSMC from incurring any major losses due to the recently imposed tariffs by the Trump administration.
Furthermore, TSMC’s planned price hikes on chip production will very likely affect the consumer electronics goods market. Devices that utilize chips from TSMC will see a drastic increase in their advertised price tags. In the end, it is going to affect the end consumer. Most chip manufacturers or consumer goods makers will not be okay with the sudden decrease in their profits. They will likely pass the higher manufacturing costs to the end consumers, experts suggest.
There are a few ways TSMC could avoid these tariffs
As pointed out by PhoneArena, there are a few ways TSMC could avoid the upcoming tariffs imposed by President Trump. TSMC could avoid these by moving a huge amount of chip production to the US. It already has a handful of plants under construction, which will produce chips for various devices in the country. TSMC has already begun producing advanced 4-nanometer chips at its manufacturing plant in Arizona. It could come into an agreement with President Trump by proposing an increased production in the States in the coming years.
President Trump has already signaled that he will implement chip tariffs, which are inevitable and could potentially be in place as early as February 18. These tariffs aim to incentivize companies to relocate production to the US. Furthermore, this could also reduce American companies’ reliance on chips from Taiwan in general and TSMC in particular.
