How the Trump tariffs on Taiwan chips could hurt the AI trade — and the likes of Nvidia

finance.yahoo.com ^ | 11/17/2024 | Daniel Howley

[RoosterRedux]

President-elect Donald Trump made raising tariffs on imported goods a tenet of his reelection campaign. And while that could raise prices on everything from jeans to children’s toys for everyday Americans, Trump has also floated the idea of another tariff that could impact Wall Street’s current favorite trade: AI.

During an appearance on Joe Rogan’s podcast ahead of the election, Trump lambasted the idea of the CHIPS Act, a bipartisan piece of legislation Biden signed in 2022 designed to bring semiconductor manufacturing back to the US. He called it “so bad.”

Instead of using legislation and billions in subsidies to bring chip-building facilities to the US, Trump said tariffs would have the same effect. In Trump’s estimation, putting tariffs on semiconductors from Taiwan would force chip builders, like TSMC, to construct chip manufacturing plants, or fabs, in the US to avoid having to pay the added tax.

But there’s no guarantee chip builders wouldn’t simply move the added cost down the line to their customers and forego spending cash on expensive US facilities.

Such a move could also end up cutting into profit margins for companies like Nvidia (NVDA) and AMD (AMD), which rely on chips built in Taiwan, unless they similarly pass those costs down to their own customers. And that could have ripple effects across the tech industry.

“If the argument is that this is the way to force it to move here, TSMC is already moving here,” explained William Reinsch, a senior adviser with the Center for Strategic and International Studies. “They're already building a fab plant in Arizona. That's all already underway and the tariffs aren't going to make that move any faster. If anything, they might complicate the effort.”

[RoosterRedux]

Both Nvidia and AMD had great earnings reports recently but their stock prices have lagged and sagged.

I think this is the primary reason.

[jacknhoo]

Because we all know Democrats and their UniParty RINO accomplices are all about reducing costs for and taxes on American citizens.

[dennisw]

As far as I know all the AI Nvidia chips are made at TSMC fab in Taiwan. The only place that has the extreme expertise to make them.
This fab is rigged to blow up all important stations if the CCP invades Taiwan.

[WeaslesRippedMyFlesh]

FUDH

[mac_truck]

putting tariffs on semiconductors from Taiwan would force chip builders, like TSMC, to construct chip manufacturing plants, or fabs, in the US to avoid having to pay the added tax.

Does this also mean the US can stop spending billions of tax payer dollars to 'defend democracy' in Taiwan?

Sounds like a win-win to me.

[Brian Griffin]

“end up cutting into profit margins for companies like Nvidia (NVDA) and AMD (AMD)”

Housing, feeding and provide health care for invaders and their offspring costs money.

Providing defense for Taiwan costs money. If the US military wasn’t funded, the PRC flag would be flying over where the silicon foundries are.

Hitting the Russian bear in Ukraine to deter the PRC from invading Taiwan is expensive.

Many of the chips never make it to the USA, they go to the EU, Japan, elsewhere in Taiwan, Canada, etc.

[Brian Griffin]

Joe Biden launched a program to build chips in the USA years ago and spent billions of US taxpayer money.

We wouldn’t want to undermine his legacy.

Having chip companies repay in tariffs the money Joe spent to build chip plants seems fair.

[RoosterRedux]

Taiwan Semiconductor Manufacturing Company (TSMC) is in the process of building three advanced semiconductor fabrication plants in Arizona, with the first expected to come online in 2025. I believe that if Trump takes office again, he will likely encourage TSMC to expedite the construction of additional facilities, although this is complicated by the current shortage of a highly trained labor force in the U.S.

Additionally, I anticipate that Trump will collaborate with Nvidia and other chip manufacturers to facilitate a smooth transition to U.S.-based production.

Regarding the potential for a Chinese attack on Taiwan, such an event would severely cripple or even destroy TSMC’s operations. This would have a cascading effect on China's economy, which is heavily reliant on chips sourced from TSMC. Consequently, it would significantly hinder China's ambitions to develop its own semiconductor industry.

[central_va]

As far as I know all the AI Nvidia chips are made at TSMC fab in Taiwan. The only place that has the extreme expertise to make them now, but that could change if tariffs make moving manufacturing back to the USA a reality.

Fixed it.

[RoosterRedux]

What does that mean?

[central_va]

putting tariffs on semiconductors from Taiwan would force chip builders, like TSMC, to construct chip manufacturing plants, or fabs, in the US to avoid having to pay the added tax.

[RoosterRedux]

I believe that if Trump takes office again

Should be: I believe that WHEN if Trump takes office again

Need more coffee.

[SauronOfMordor]

They attack tariffs using the assumption that all products will be subject to the same tariff rates.

I think Trump’s plan is to selectively apply tariffs to encourage US production.

[WeaslesRippedMyFlesh]

It means the article is one sided BS that ignores the benefits to the United States written by a tool of the State to instill Fear Uncertainty and Doubt in the minds of the electorate which are almost half retarded.

I just cut to the chase.

FU Daniel Howley

[Sacajaweau]

I’ve been googling Kevin O’Leary on all these money matters...cuz I think he gives honest answers...everyone else....I take lightly.

[RoosterRedux]

That is my understanding also.

I posted this article to explain, in part, why Nvidia's and AMD's stock prices are sagging.

I don't think this article is an attack on tariffs (at least I didn't see it that way) but just a statement of fact.

I think it is dangerous to have our semiconductor industry so incredibly dependent on Taiwan.

[RoosterRedux]

Gotcha. Thx.

[linMcHlp]

Trump’s plan is to selectively apply tariffs to encourage US production.

Correct

[Da Coyote]

Yahoo. The name is all you need to know.