TSMC: AI Chip Demand Strong Despite Indirect US Tariff Impact
Taiwan Semiconductor Manufacturing Company (TSMC), the world's largest contract chipmaker, acknowledged the impact of US tariffs on its business, although the company emphasized that the effect is indirect, as reported by Reuters.
Speaking at TSMC’s annual shareholders meeting in Hsinchu, Taiwan, CEO C.C. Wei explained that tariffs are imposed on importers, not exporters, like TSMC, so the company isn’t directly affected. However, Wei noted that higher prices due to tariffs could potentially lead to reduced demand.
While tariffs may have some impact, Wei assured shareholders that AI demand remains robust, consistently outpacing the supply of semiconductors. He emphasized that TSMC’s primary challenge is meeting the high demand for chips, especially in the AI sector, and that they are working hard to meet customer needs.
Strong Demand for AI Chips
According to Reuters, TSMC has seen strong demand for chips, particularly for AI applications. In April, the company gave a bullish outlook for the year, driven by this growing demand.
Despite challenges such as tariff-related price increases, AI applications continue to drive TSMC’s growth. Wei reiterated the company’s commitment to supply enough chips to meet the demands of customers, indicating that demand is still outstripping supply.
Plans for Expansion in the Middle East
Regarding media reports that TSMC might build chip factories in the United Arab Emirates (UAE), Wei clarified that the company has no plans for any such operations in the Middle East. This dismissal came as the company faces increasing demand for its chips and seeks to expand capacity.
Also read: Trump’s Tariffs Threaten Big Tech’s AI Infrastructure Growth
China-Taiwan Tensions and Regulatory Compliance
TSMC's tie with China has been under scrutiny following US government sanctions against Chinese firms such as Huawei. Wei was questioned regarding TSMC's action to stop supplies to Chinese chip designer Sophgo, which produced a chip similar to Huawei's AI processor. Wei said that TSMC is closely cooperating with Taiwan and the US governments to comply with legal and regulatory needs.
Moreover, TSMC is still exposed to wider political risks stemming from deepening military tensions between Taiwan and China. Wei reiterated that those potential crises are matters of governments, not TSMC alone, highlighting the sensitive geopolitical dynamics surrounding Taiwan.
