Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday reiterated robust business prospects for this year as strong artificial intelligence (AI) chip demand from Nvidia Corp and other customers would absorb the impacts of US tariffs.
“The impact of tariffs would be indirect, as the custom tax is the importers’ responsibility, not the exporters,” TSMC chairman and chief executive officer C.C. Wei (魏哲家) said at the chipmaker’s annual shareholders’ meeting in Hsinchu City.
TSMC’s business could be affected if people become reluctant to buy electronics due to inflated prices, Wei said.
Photo:An Rong Xu, Bloomberg
In addition, the chipmaker has voiced its concern to the US Department of Commerce about increases in manufacturing costs in the US if the levies were implemented, he said.
As TSMC sources some manufacturing equipment from US equipment makers, such as Applied Materials Inc, those suppliers could face the burden of the levies on equipment made in Asia, he said.
“We told them that tariffs would do no good for any party under such circumstances,” Wei said. “They said they would take such circumstances into consideration.”
Regarding sector-specific tariffs on semiconductors, he said the company simply requested “fair treatment” to safeguard its competitiveness, adding that TSMC has no control over tariffs, which are determined through negotiations between governments.
Nevertheless, the chipmaker said it is certain that AI chips would fuel its revenue growth this year.
“Demand is very high,” Wei said. “We are trying hard to increase supply, but still unable to fully satisfy demand.”
The company has also more than doubled its capacity of advanced packaging technology, or chip-on-wafer-on-substrate, to alleviate constraints, but supply remains tight, he said.
The chipmaker yesterday maintained a forecast for 25 percent growth in full-year revenue and expects net profit to set a record high this year.
However, it dismissed a Bloomberg News report about its evaluation about building an advanced production facility in the United Arab Emirates, saying the likelihood was slim, because of a lack of customers.
“When TSMC evaluates a potential site to build a manufacturing fab, customer demand is always the No. 1 factor,” Wei said. “Chip designers are [mostly] from the US, Taiwan and China. A few are from Europe or Japan. That’s all.”
The US remains a relatively ideal site to build new manufacturing facilities, given the country’s long history in semiconductors, and its larger pool of experienced engineers and workers, he said.
However, it would be “very, very difficult” for TSMC to build US$100 billion factories in the US as planned as it takes at least two to two-and-a-half years to build an advanced fab, he added.
TSMC yesterday said every 1 percent of appreciation of the New Taiwan dollar would reduce its gross margin by 0.4 percentage points.
An 8 percent appreciation of the NT dollar against the US dollar so far this year has eroded more than 3 percentage points of its gross margin, it added.
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