Tae Kim

Taiwan Semiconductor Manufacturing's business may be more resilient than believed from the negative fallout after President Donald Trump's tariffs.

On Tuesday, Susquehanna analyst Mehdi Hosseini reiterated his Positive rating on TSMC. "Recent checks suggest TSM's [chip] wafer shipment and ASP [average selling price] trends remain intact," he wrote.

In early trading Tuesday, TSMC's American depositary receipts rose by 4.1% to $152.18.

Last week, Trump announced that additional tariff rates on dozens of countries -- 34% on China, 46% on Vietnam, and 26% on India, for example -- would go into effect on Wednesday. At the time, the White House said semiconductors would be exempt, although the administration may apply tariffs to them in the future.

Hosseini said TSMC could benefit from a tariff rule that says if at least 20% of an imported item's value is "produced or transformed in the U.S.," the tariffs will be levied on the non-U.S. content. The analyst noted 70% of the TSMC's revenue is generated from American companies and its chips could potentially meet some of the U.S. content value requirements, which would lower the level of tariffs on technology products.

"The impact of the new tariff regime on TSM could be contained and lessened given its mix of U.S.-based customers," the analyst wrote.

TSMC dominates the market for manufacturing high-end chips. It leads the market for making semiconductors used for AI applications, including chips from Nvidia. The company also manufactures the core processors inside Apple iPhones, Qualcomm mobile chipsets, and processors made by Advanced Micro Devices.

Write to Tae Kim at tae.kim@barrons.com

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April 08, 2025 12:12 ET (16:12 GMT)

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