TSMC CEO Says AI Demand Strong, But Trump’s Tariffs Still a Risk

Taiwan Semiconductor Manufacturing Company (TSMC) chief executive officer C.C. Wei said Tuesday that U.S. tariffs are creating some business pressure, although indirectly, and warned that rising costs could affect operations as the company invests heavily in new U.S. chip facilities.

“Tariffs do have some impact on TSMC, but not directly. That’s because tariffs are imposed on importers, not exporters. TSMC is an exporter. However, tariffs can lead to slightly higher prices, and when prices go up, demand may go down,” Wei said at the company’s annual shareholders meeting, as cited by Reuters. 

Many U.S. chip designers, including Apple (AAPL), Nvidia (NVDA), Advanced Micro Devices (AMD), and Qualcomm (QCOM), rely on TSMC to fabricate their most advanced chips.

“If demand drops, TSMC’s business could be affected. But I can assure you that AI demand has always been very strong and it's consistently outpacing supply,” he added.

Wei said TSMC had discussed the impact of tariffs with the U.S. Commerce Department and warned that levies could raise costs at its Arizona manufacturing sites, where the company is investing $165 billion. 

“The U.S. Commerce Department said this is open for discussion, but how long that will take remains unclear,” Wei said. “The real point is that we are in active communication, because only through understanding can they realise the consequences.”

He also reiterated that the additional $100 billion in investment announced in March alongside President Donald Trump will be challenging to deliver on schedule. “He said, ‘Mr Wei, do your best, that’s good enough.’”

Wei dismissed speculation about a potential expansion to the United Arab Emirates, stating that TSMC has “no plans” for a Middle East facility and that it is “not very likely” the company would have customers there.

Domestically, the appreciation of the Taiwan dollar has shaved more than three percentage points off TSMC’s gross margin, Wei noted, reiterating concerns shared during the company’s earnings call in April.

TSM’s stock has fallen 1% this year but gained more than 25% over the past 12 months. The shares edged 0.1% lower in pre-market trade on Tuesday. 

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