TLDR
- Taiwan Semiconductor Manufacturing Company (TSM) shares rose 1.18% in pre-market trading after Taiwan’s Vice Premier rejected the Trump administration’s 50:50 chip sourcing policy.
- The U.S. wants American firms to split semiconductor purchases evenly between domestic and imported chips, aiming for 40% domestic production by the end of Trump’s term.
- Taiwan Vice Premier Cheng Li-chiun said the 50:50 plan was not discussed in trade negotiations and Taiwan would not support it.
- Taiwan manufactures over 90% of the world’s advanced semiconductors, while the U.S. only made 12% of global chips last year.
- TSMC is expanding its U.S. presence with $165 billion in Arizona investments but plans to keep most production in Taiwan.
Taiwan Semiconductor Manufacturing Company shares climbed Thursday after Taiwan’s government rejected a key Trump administration semiconductor policy. The stock rose 1.18% to around $292 per share in pre-market trading.
Taiwan’s Vice Premier Cheng Li-chiun told reporters the island would not support the proposed 50:50 chip sourcing policy. The plan would require U.S. companies to split their semiconductor purchases evenly between domestic and imported chips.
The move comes as Washington pressures Taipei to agree to the arrangement. The U.S. currently maintains a 20% tariff on imports from Taiwan. The Trump administration has floated the idea of 100% tariffs on semiconductors.
U.S. Commerce Secretary Howard Lutnick outlined the administration’s goal earlier this week. He wants half of all chips sold in America to be made domestically. The other half would come from Taiwan.
Lutnick is targeting 40% domestic chip production by the end of Trump’s current term. Reaching that goal would require over $500 billion in local investment.
Taiwan’s Trade Strategy
Cheng spoke while updating the public on trade negotiations with Washington. She said Taiwan is considering a high-tech strategic partnership with the U.S. But the 50:50 policy was not part of recent discussions.
Taiwan runs a large trade surplus with the United States. Taipei is working to reduce the current 20% tariff on its exports to America.
The Vice Premier described Taiwan’s proposed investment approach as an extension of U.S. production capacity. This would not involve relocating supply chains. Instead, Taiwan would expand American manufacturing through government support measures.
These measures include export credit guarantees and joint development of industrial clusters. Cheng said the U.S. expects Taiwan to expand investments and cooperate on supply chain development.
Taiwan manufactures more than 90% of the world’s advanced semiconductors. TSMC leads as the largest chip supplier for U.S. tech giants including Nvidia and Apple.
The U.S. manufactured only 12% of global semiconductors last year. The Semiconductor Industry Association expects worldwide chip sales to surpass $700 billion by year-end. The market could hit $1 trillion by 2030.
TSMC’s U.S. Expansion Plans
TSMC is building manufacturing facilities in Arizona. The company recently expanded its planned U.S. investments to $165 billion after a new $100 billion pledge earlier this year.
The bulk of TSMC’s production will remain in Taiwan. Cheng emphasized that Taiwan’s industry aims to stay rooted in the country while deploying technology globally.
She added that Taiwan wants to form bilateral strategic relationships. The country understands the U.S. goal of increasing domestic chip production.
The proposed 50:50 policy could benefit American chipmakers. Companies like Intel, GlobalFoundries, Micron, and Texas Instruments might see stock gains if the plan moves forward.
TSMC did not participate in the latest trade talks. Cheng confirmed the 50:50 plan was not brought up during negotiations.
Wall Street analysts maintain a Strong Buy rating on TSMC shares. Nine analysts rate it a Buy while one recommends Hold. The average price target of $283.11 suggests nearly 2% downside from current levels.
The stock gained 3.29% during regular trading Wednesday before Thursday’s pre-market gains.
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