TAIPEI (Taiwan News) — US President Donald Trump’s tariffs could impact chipmakers such as TSMC, affecting not only chip demand but plans to set up US fabs. 

Trump’s tariffs currently do not apply to semiconductor imports, but the exemption may not last, a Reuters commentary said. On Thursday, Trump warned of additional tariffs, saying "the [ones on] chips are starting very soon,” per Bloomberg. 

“Either way, higher prices for end-products, coupled with a likely recession in the world's largest economy, will weigh on consumer demand,” the report said. For instance, Apple manufactures about 85% of its iPhones in China, which has been hit with 125% US tariffs. 

The report said the blow to demand for iPhones and other consumer electronics could be painful for companies like TSMC and Samsung. 

The tariffs could raise the costs for TSMC to set up fabs in the US, according to the report. For example, it said some lithography machines produced by the Netherlands’ ASML Holding, vital to making cutting-edge chips, are priced up to US$350 million (NT$11.5 billion) per piece. Trump's 20% tariff on the European Union could mean TSMC must pay tens of millions of dollars extra to bring one into the US. 

The report said that if the semiconductor industry faces new levies, the direct hit on TSMC, with its US$737 billion net worth, may be limited. It noted the company had roughly US$60 billion, or 70% of sales, last year from North America-based customers such as Apple and Nvidia. 

However, in the global semiconductor supply chain, most processors purchased by companies like TSMC are packaged and assembled into PCs, smartphones, and other devices outside the country where they are manufactured, often in places like China or other parts of Asia. Last year, the US imported US$82 billion in chips and US$100 billion in computers.

The report said chipmakers could suffer the first blow in Trump’s trade war. Increasing costs may also foil Trump's plan to revive US manufacturing, it added.