TAIPEI (Taiwan News) — Taiwan chipmaker Vanguard warned on Tuesday that US President Donald Trump’s tariffs on semiconductors could cause inflation.
Reuters reported Trump intends to impose 25% tariffs on automobiles in April, with similar duties on semiconductors and pharmaceuticals rising substantially over the year. Trump did not give a date for those duties, providing some time for chip and pharmaceutical makers to set up in the US.
Trump’s tariffs could seriously harm international trade, the report said. According to Vanguard Chair Fang Leuh (方略), "If tariffs are implemented ... it will cause many impacts, from inflation to a decline in end-product purchasing power, and even affect expected economic growth.”
"This will have some impact on the global semiconductor industry, but we currently lack the ability to predict how the potential impact will develop,” he added. The chair told analysts during an earnings call that Vanguard would adopt a "wait and see" approach.
Fang said Trump’s tariffs would largely not impact Vanguard since the proportion of its semiconductor products directly exported to the US is low. He added that the company is not considering setting up manufacturing in the US.
Meanwhile, TSMC is building fabs in Arizona. Taiwanese companies have been considering setting up plants in the US to mitigate the impact of Trump's tariffs.
During the Tuesday call, Fang also acknowledged the intense market competition from companies in China. “Chinese companies are building up unneeded capacity in mature processes, leading to vicious price competition and a lack of trust among many customers,” he said.
Chinese companies have been threatening the market dominance of Vanguard and other Taiwanese foundries for legacy chips used in cars and display panels. Company executives said Taiwanese foundries would be forced to retreat or pursue more advanced processes.
However, Fang said he believes the pace of orders to Taiwan would not suffer, partly due to US-China trade tensions. He noted US customers have sought to secure their supply chains and buy chips from outside China.
