Trump To Tariff Chips Made In Taiwan, Targeting TSMC

[tonyget]

Yes, the US does need a compelling reason, uber-compelling, to engage in a great power, potentially nuclear conflict over Taiwan. The growth parts of the US economy depend on Taiwan, and both China and Taiwan can threaten that. Different ways and different goals but the threat is there.

I think Taiwan is a walk away situation for the US. We need TSMC intact too much, and our motivation to fight is less than China's, so the best move is to win favor with China by doing nothing, muttering about One China being official policy forever. We would then be under China's thumb for technology.

So Taiwan's best move to survive and the US best move to avoid China's thumb is to split the card deck in half. You offer half of TSMC to the US in return for a non-ambiguous defense treaty, possibly with a nuclear deterence. This is the same as declaring war, but with post-war outcomes somewhat more assured--some parts of TSMC will survive, the US could lose and still not be under China's thumb entirely, and that actually seems like how wars are de-escalated (if not avoided entirely). It could mean the war doesn't go nuclear.

Let's not mix TSMC and Taiwan together. TSMC as company can still make money even if they move all production out of Taiwan，they can move headquarter to the US and continue to thrive，whatever happens to Taiwan doesn't really affect TSMC. But the converse is not true

In other word, TSMC can live without Taiwan，but Taiwan can not live without TSMC. This is true even from a pure economic perspective，TSMC accounts for 22% TW GDP

 

[soAsian]

Let's not mix TSMC and Taiwan together. TSMC as company can still make money even if they move all production out of Taiwan，they can move headquarter to the US and continue to thrive，whatever happens to Taiwan doesn't really affect TSMC. But the converse is not true

In other word, TSMC can live without Taiwan，but Taiwan can not live without TSMC. This is true even from a pure economic perspective，TSMC accounts for 22% TW GDP

I agree that TSMC != Taiwan. However, TSMC's management team and talent are mostly Taiwanese. It is much easier for TSMC to operate in Taiwan or in a country with a similar culture. The smooth opening of TSMC's Japan fab show this. I would also argue that Asian work culture is different from that of the West.

A lot of times, people underestimate the difference in work culture, which can create friction and even impede a company's operations. Can you apply Chian's 996 to Western workers?

 

[XYang2023]

https://www.reddit.com/r/Semiconductors/comments/1gsn7mp/exemployee_claims_tsmc_holds_american_workers_to

 

[Barnsley]

A lot of times, people underestimate the difference in work culture, which can create friction and even impede a company's operations. Can you apply Chian's 996 to Western workers?

Is that a work culture to proud of?

 

[Daniel Nenni]

Not to mention existing worldwide fabs already aren't keeping up with demand

Why do you think that?

Last I heard the world wide semiconductor foundry utilization is under 80%. So yes there is plenty of utilization to spare. In fact, with the current fab growth rate, I do not see that number changing anytime soon. China is building out mature node fab capacity at an alarming rate. Other countries are on shoring fab builds. TSMC’s CAPEX is still at record levels.

 

[Daniel Nenni]

Is that a work culture to proud of?

I spent 40 years in Silicon Valley and I never even heard the phrase work-life-balance until now. We worked long hours, played hard, and raised children (I have 4). Still, I worked start-up hours for most of my career and have zero regrets. In my opinion the boomer generation made semiconductors great. So good luck with your work life balance. Let’s see what your retirement looks like in 40 years.

 

[Xebec]

Why do you think that?

Last I heard the world wide semiconductor foundry utilization is under 80%. So yes there is plenty of utilization to spare. In fact, with the current fab growth rate, I do not see that number changing anytime soon. China is building out mature node fab capacity at an alarming rate. Other countries are on shoring fab builds. TSMC’s CAPEX is still at record levels.

You're right - I was way too general here.

I was thinking of Nvidia and AMD recently releasing brand new AI accelerators, GPUs, and CPUs that are still on TSMC N4.. Given how competitive this space is right now, I would have expected N3 if there was enough capacity available.

 

[Daniel Nenni]

You're right - I was way too general here.

I was thinking of Nvidia and AMD recently releasing brand new AI accelerators, GPUs, and CPUs that are still on TSMC N4.. Given how competitive this space is right now, I would have expected N3 if there was enough capacity available.

That might have to do more with packaging than process technology. I know that TSMC has plenty of N3 capacity but CoWos is still building up. In fact the 2025 TSMC CAPEX favors packaging. AMD and Nvidia are definitely not first to a node but it seems to me that they should be in N3 HVM by now. They also have inventory concerns, product on the shelf etc...

 

[Lorien]

Is that a work culture to proud of?

International competition doesn't care. Asians get more done, absolutely.

 

[Paul2]

Yes, the US does need a compelling reason, uber-compelling, to engage in a great power, potentially nuclear conflict over Taiwan. The growth parts of the US economy depend on Taiwan, and both China and Taiwan can threaten that. Different ways and different goals but the threat is there.

I think Taiwan is a walk away situation for the US. We need TSMC intact too much, and our motivation to fight is less than China's, so the best move is to win favor with China by doing nothing, muttering about One China being official policy forever. We would then be under China's thumb for technology.

So Taiwan's best move to survive and the US best move to avoid China's thumb is to split the card deck in half. You offer half of TSMC to the US in return for a non-ambiguous defense treaty, possibly with a nuclear deterence. This is the same as declaring war, but with post-war outcomes somewhat more assured--some parts of TSMC will survive, the US could lose and still not be under China's thumb entirely, and that actually seems like how wars are de-escalated (if not avoided entirely). It could mean the war doesn't go nuclear.

Being deferential, and non-provocative indicates weakness. There is no "middle ground". A predator looks at you, and makes a binary decisions: to eat or not to eat.

If he know you will not fight, he knows he can attack. America's failure to engage in thermonuclear war with Russia over an attack on a defence-treaty covered nation signalled to every one of America's adversaries — nuclear umbrella is fake, time to eat.

 

[Barnsley]

International competition doesn't care. Asians get more done, absolutely.

Indeed!

However folk who were never forced to work like that to put bread on the table , I am not sure they understand the predicament of todays youth.
I look at 5 year olds going for 12hrs tuition on Saturday mornings here in Singapore and wonder what has happened!!!

 

[Xebec]

Being deferential, and non-provocative indicates weakness. There is no "middle ground". A predator looks at you, and makes a binary decisions: to eat or not to eat.

If he know you will not fight, he knows he can attack. America's failure to engage in thermonuclear war with Russia over an attack on a defence-treaty covered nation signalled to every one of America's adversaries — nuclear umbrella is fake, time to eat.

Which defense treaty did the US have with Ukraine?

 

[Paul2]

Which defense treaty did the US have with Ukraine?

That Kravchuk-Clinton "deal of the century", which was advertised as Ukraine being extended an offer that is even more superior to NATO, which was the highly advertised series of agreements USA extended to Ukraine in exchange for its accession to START treaty, and dismantlement of its strategic bomber fleet, tanks from Germany, submarines, missiles, and nuclear weapons, which amounted to a de-facto demilitarisation https://en.wikipedia.org/wiki/Lisbon_Protocol

Just as with US current arrangement with Taiwan, US used an excuse of "not provoking" to keep these arrangements non-explicit, while keeping assuring Ukrainians that their commitment is absolutely real.

 

[blueone]

"So dumb"

You are so polite...

Perhaps, but at least the editorial board at the Wall Street Journal agrees with me:

https://www.wsj.com/opinion/donald-trump-tariffs-25-percent-mexico-canada-trade-economy-84476fb2?st=6nUdP6&reflink=desktopwebshare_permalink

"The Dumbest Trade War in History"

 

[hist78]

Perhaps, but at least the editorial board at the Wall Street Journal agrees with me:

https://www.wsj.com/opinion/donald-trump-tariffs-25-percent-mexico-canada-trade-economy-84476fb2?st=6nUdP6&reflink=desktopwebshare_permalink

"The Dumbest Trade War in History"

I lease a small lot at our City's community lot for growing vegetables every year. But I can only do 5 months every year because the cold temperature. Actually for most places in the US (like California) that are suitable for growing vegetables, they are facing similar limitations like me.

To impose high tariffs on the imported vegetables and fruits does not make any sense. Especially it's unfair to those average Americans who need to pay for their groceries from their own pockets.

This is essentially the same as raising federal taxes on Americans.

 

[blueone]

I lease a small lot at our City's community lot for growing vegetables every year. But I can only do 5 months every year because the cold temperature. Actually for most places in the US (like California) that are suitable for growing vegetables, they are facing similar limitations like me.

To impose high tariffs on the imported vegetables and fruits does not make any sense. Especially it's unfair to those average Americans who need to pay for their groceries from their own pockets.

This is essentially the same as raising federal taxes on Americans.

Personally, I believe Trump is infatuated with tariffs because it is the only tool he legally has with sufficient international impact which he can use without an act of Congress. Oddly, this power was granted by Congress, not the US Constitution.

https://crsreports.congress.gov/product/pdf/IF/IF11030#:~:text=Presidential%20Discretionary%20Authority%20over%20Tariff%20Rates.&text=Section%20201%20of%20the%20Trade,injury%20to%20a%20U.S.%20industry.

It seems obvious to this citizen observer that he envies the power of autocratic leaders like Jinping, Putin, and Un. And, like it or not, since Trump's own party is not aligned on practically any fiscal policy, and has only meager congressional majorities, a few unaligned Republicans can thwart his plans. I see why he is attracted to the one tool he can use like an autocrat. Unfortunately, broad tariffs are more like a machete than a scalpel, and Trump is trying to do delicate foreign policy surgery. All I can say, Mr. President, is don't accidentally cut off anything valuable while you're using that tool.

 

[lefty]

The tariff on chips thing hasn't been thought through. Most of the chips imported to US are already incorporated in complete products (like phones laptops, etc.) They would have to put the tariff on the whole product. So, this would end up being a tariff on all electronic products coming into US, regardless if they were made by US companies or not. Trump would be shooting himself in the foot.

 

[KevinK]

Trump would be shooting himself in the foot.

As pretty much everyone here is suggesting, it's not clear what Trump's specific goals are. He has mentioned many:
* revenue enhancement so he can offer more income tax cuts
* drive more manufacturing and mineral / oil / natural resource production and associated jobs to the US
* negotiate a better "deal" with offending nations that forces them to buy more from the US.
One big challenge with pursuing all three is that if you are successful with one, the effectiveness of the other two is greatly reduced.

My take is that he has specifically avoided discussing outcomes because the outcomes are so unpredictable, and in the case of the second one, a very long lead item (how many years to build domestic fabs to replace tariffed TSMC products ?). My Trump-favoring, toy designer / importer, brother-in-law (in 2016) complained massively about the last round of Trump tariffs on China in 2017, because Trump did nothing to build domestic capacity, and had no plan for how to ramp up replacement manufacturing in the US. Pretty sure his current focus is just showing that "he is doing something about unfair trade" regardless of outcomes.

 

[Markwrob]

While tariffs on electronics will hit hard, the really big impacts will be on food and energy. Most consumers can make do with their present electronics-containing items. But they need fresh food and a decently comfortable place for their family to live. So I expect the big pushback will be on the staples. Electronics, while big, will just be in the noise.

 

[OneEng]

Yes, the US does need a compelling reason, uber-compelling, to engage in a great power, potentially nuclear conflict over Taiwan. The growth parts of the US economy depend on Taiwan, and both China and Taiwan can threaten that. Different ways and different goals but the threat is there.

I think Taiwan is a walk away situation for the US. We need TSMC intact too much, and our motivation to fight is less than China's, so the best move is to win favor with China by doing nothing, muttering about One China being official policy forever. We would then be under China's thumb for technology.

So Taiwan's best move to survive and the US best move to avoid China's thumb is to split the card deck in half. You offer half of TSMC to the US in return for a non-ambiguous defense treaty, possibly with a nuclear deterence. This is the same as declaring war, but with post-war outcomes somewhat more assured--some parts of TSMC will survive, the US could lose and still not be under China's thumb entirely, and that actually seems like how wars are de-escalated (if not avoided entirely). It could mean the war doesn't go nuclear.

While I am not sure about your solution, I agree with the problem statement.

I have THOUGHT that any US president would be hesitant to cause a world-wide recession over his actions (or lack of actions). I honestly do believe that should TSMC in Taiwan be damaged (which I believe would happen for sure should China invade .... either by China's hand on accident, or by Taiwan's hand on purpose).

With this particular president, I am not so certain.

Personally, I believe Trump is infatuated with tariffs because it is the only tool he legally has with sufficient international impact which he can use without an act of Congress. Oddly, this power was granted by Congress, not the US Constitution.

https://crsreports.congress.gov/product/pdf/IF/IF11030#:~:text=Presidential%20Discretionary%20Authority%20over%20Tariff%20Rates.&text=Section%20201%20of%20the%20Trade,injury%20to%20a%20U.S.%20industry.

It seems obvious to this citizen observer that he envies the power of autocratic leaders like Jinping, Putin, and Un. And, like it or not, since Trump's own party is not aligned on practically any fiscal policy, and has only meager congressional majorities, a few unaligned Republicans can thwart his plans. I see why he is attracted to the one tool he can use like an autocrat. Unfortunately, broad tariffs are more like a machete than a scalpel, and Trump is trying to do delicate foreign policy surgery. All I can say, Mr. President, is don't accidentally cut off anything valuable while you're using that tool.

LMAO! Loved this post.

I largely agree. I suspect that should the current administration successfully use Tariffs to plunge the US into recession, that the "Trade Expansion Act" could be overturned in 2028 to avoid such silliness in the future.

As it turns out, much of the "guard rails" on the US administrations over the last several decades have been based more on the theory of "Oh, the president would never do that" or "the US wouldn't elect a president that would do that".

New laws are definitely needed ..... and perhaps an amendment or two to patch up the flaws in the above 2 statements.