TSMC’s pivotal role in the global semiconductor industry has once again come under scrutiny following the U.S. President Donald Trump’s recent tariff threats. In a February 5 report by Le Figaro, “Le géant taïwanais TSMC en première ligne face aux menaces tarifaires de Donald Trump,” experts including Chip War author Chris Miller and Ming-Yen Ho, a researcher from DSET’s Economic Security Research Unit, analyzed the implications of these developments.
Taiwan’s Semiconductor Giant Faces Tariff Pressure Amid Market Turmoil
As Taiwan welcomed the Lunar New Year, its stock market experienced volatility driven by the launch of DeepSeek’s AI model in China. The model, which claims to operate on lower-cost and less powerful chips, raised concerns about potential shifts in the AI hardware landscape.
TSMC, the world’s most advanced semiconductor manufacturer and a key supplier to Silicon Valley, saw its stock drop sharply. Nvidia, one of TSMC’s largest clients, also suffered a major blow, losing more market value than the entire CAC 40 index of France.
Market Overreaction or Genuine Threat?
Chris Miller remains cautious about the pessimistic market sentiment. He notes that fears surrounding DeepSeek’s impact on Nvidia’s long-term demand may be exaggerated, as companies have been improving AI efficiency and lowering costs since 2023. DeepSeek’s model, he argues, is simply part of this ongoing trend rather than an unprecedented disruption.
A more pressing concern, however, is Trump’s threat to impose a 100% tariff on imported chips. DSET researcher Ming-Yen Ho warns that such a move could be counterproductive, undermining U.S. competitiveness in AI. “Taiwan and the U.S. have a complementary relationship—Taiwan leads in manufacturing, while the U.S. excels in chip design. If the U.S. isolates itself by imposing tariffs, it will no longer be ‘Taiwan and the U.S. countering China’ but rather the U.S. struggling alone. Given its weaker semiconductor manufacturing capabilities, this would be a serious setback.”
Could Trump’s Tariffs Benefit China?
Currently, Taiwan and the U.S. maintain strong technological cooperation, while China remains isolated in key semiconductor supply chains. The Biden administration’s export controls have already slowed China’s AI and semiconductor advancements.
However, Le Figaro highlights that Trump’s unilateral trade policies could fracture the U.S. alliance with key semiconductor powerhouses, including Taiwan, Japan, South Korea, and the Netherlands. If Washington shifts its strategy from multilateral cooperation to tariff-based economic nationalism, China could exploit the divide to accelerate its AI development.