Taiwan

Intelligence for Better Decision Making

TSMC's Strategic Moves Amid Trump's Tariff Threats
Feb. 14, 2025 | Indirect Indicator

In a significant move, TSMC held its recent board meeting in Arizona—the first in 37 years—where financial reports and budgets were approved, though no new US investments were announced.

Nonetheless, the company is considering accelerating its mass production timeline for 2nm chips, aiming to move it up from 2028. The Arizona plant is set to begin 4nm chip production by late 2024, and a second fabrication facility is planned for 2028. Although no fresh US investments were discussed at the meeting, TSMC is expected to engage with the US government regarding potential tariffs on chips. The company is working to establish a significant market share, targeting 70% in North America by 2024, a strategy possibly spurred by President Trump's tariff threats.

The Trump administration's tariff threats might hasten TSMC’s pace of investment and production within the US, driven by the rising demand for advanced semiconductor processes. While TSMC has yet to commit to advanced packaging investments in the US, the broader economic landscape has absorbed some impacts. The US Consumer Price Index for January showed a year-on-year increase of 3% and a month-on-month rise of 0.5%, exceeding forecasts and heightening inflation concerns linked to the specter of tariffs. Despite calling for rate cuts and tariffs before the CPI release, Trump initially supported the Federal Reserve’s interest rate stance. Federal Reserve Chairman Jerome Powell highlighted the economy's resilience and the suitability of current rates, a sentiment supported by CPI data that tempered expectations for rate cuts. As a result, Taiwan's Ministry of Economic Affairs entered discussions with the Trump administration about reducing tariffs.

TSMC Chairman Wei Zhejia reaffirmed the company's commitment to US technology development while designating Taiwan as the primary production site. During the meeting, the progress of TSMC's US factory construction was reviewed, highlighting a $65 billion investment across three wafer fabs, with a 4nm fab already in production. In exchange for potential tariff concessions, TSMC might broaden its US investments, potentially initiating advanced packaging lines and partnering with tech leaders like Nvidia and Apple. However, analysts warn that chip tariffs could significantly affect American tech firms, necessitating balanced solutions. Taiwan, a pivotal player in the semiconductor supply chain, enjoys the benefits of a strong industrial ecosystem and partnerships with Japan in AI and robotics. The absence of formal tariff announcements concerning Taiwan provides some relief.

Meanwhile, companies like Ahold Delhaize and Siemens Energy have voiced concerns, warning that US import tariffs could increase consumer prices as businesses adjust to higher costs. European steelmakers have urged the EU to counteract proposed tariffs, fearing widespread repercussions for industries such as automotive and consumer goods, raising the specter of a global trade war that could elevate costs for US consumers. Foxconn Chairman Liu Yangwei has also expressed concerns about tariff effects but noted ongoing US manufacturing plans amid uncertainties. Foxconn aims to branch into AI servers and new sectors, anticipating financial growth contingent upon market conditions.

Taiwan argues that a 100% tariff on semiconductors would violate WTO regulations. As a foundry, TSMC would likely pass on much of the tariff burden to clients, impacting final processed products rather than raw chips. Despite these challenges, Taiwan’s stocks have experienced slight declines due to tariff uncertainty, though stability is anticipated thanks to potential advancements in AI, precision machinery, and robotics.

Trump’s proposed tariffs on Taiwanese chips pose potential risks to industry growth and US economic stability. Such measures could drive Taiwan closer to China, complicating US-Taiwan relations and benefiting competitors like China, Japan, and South Korea. The increased costs for companies utilizing Taiwanese chips, such as Apple and Nvidia, could translate into higher consumer prices. Showcasing Taiwan's investments in the US might help alleviate some concerns over tariffs. Despite ongoing trade tensions, the shipping index remains stable, and Trump's emphasis on bolstering domestic production through "Made in America" initiatives offers optimism for future demand. As an alternative to stringent tariffs, a nuanced US-China economic partnership is proposed to minimize sector impacts and maintain geopolitical stability.
US CPI Surge Sparks Market Volatility and Inflation Concerns
Feb. 14, 2025 | Indirect Indicator

In January, the US Consumer Price Index (CPI) experienced a 3% year-on-year increase, surpassing expectations of a 2.9% rise and marking the highest inflation rate since June 2024.

On a monthly basis, the CPI rose by 0.5%, again exceeding forecasts. This unexpected surge in inflation has led to significant declines in stock futures, as well as increases in the US dollar and Treasury yields. The core inflation rate also surpassed expectations, rising by 3.3% year-on-year and 0.4% on the month, largely due to escalating housing costs and a substantial 15.2% increase in food prices, with eggs seeing a particularly sharp jump.

Analysts are meeting these CPI figures with caution, suggesting potential delays in interest rate cuts. The Federal Reserve is concerned about the current inflation level, which remains above the targeted 2% annual rate. In its January meeting, the Fed chose to keep the benchmark interest rate unchanged, yet the recent rise in CPI has led analysts to predict that future rate cuts may happen more gradually than previously expected. Adding to the complexity, former President Trump's public calls for interest rate cuts and proposed tariffs present a possible challenge to the perceived independence of US monetary policy.

Federal Reserve Chairman Jerome Powell has stated there is no immediate need for rate reductions, despite some analysts viewing the CPI report as a possible end to the current cycle of rate decreases. The increase in housing costs and a dramatic 53% annual spike in egg prices have significantly contributed to inflation pressures. This has been mirrored in the stock market, where the Dow Jones has fallen by more than 400 points, and US Treasury bond yields have risen due to these inflation concerns.

The US CPI increase poses ongoing challenges in managing inflation. On February 12, market indexes showed mixed results, with some areas experiencing declines, while others, such as the Nasdaq Composite and the Philadelphia Semiconductor Index, saw slight gains. This reflects broader concerns about inflation and potential adjustments in Federal Reserve policy.

Monitored Intelligence for Taiwan - Feb. 14, 2025


News
Media
599

Government
Releases
29

City/State
Releases
63

Embassy
Releases
3
Foreign
Service
Advisories
0
Academic/
Think
Tank
0


Podcasts
0


Videos
0

Social
Media
0

Business
Releases
3

Erudite Risk takes an all risks approach to intelligence reporting. We categorize key intelligence into one of 40 different risk intelligence categories.

The goal is to provide intelligence that allows decision makers to avoid being blindsided by what they may have missed, while informing them to make better decisions as well.

Risk Categories Reported on Today

Risk Category
Items Reported On
Political Scandal or Corruption
5
Corporate Corruption or Fraud
6
Geopolitical Conflict and Disputes
2
Climate Change
3
Pollution
2
Strikes and Work Stoppages
1
Natural Disasters
1
Crime
5
Extreme Weather Events
3
Regulation
4
Accidents
1

Erudite Risk also includes operations categories so you can monitor the environment for better decision making. Everything is tied together--what happens in risk affects operations and what happens in the market impacts risk profiles.

We categorize key intelligence into one of 30 different operations intelligence categories.

Different roles and functions within the organization can monitor different key issue areas. HR may monitor employment, wages, regulations, labor and management relations, etc., while P&L leaders may monitor overall developing trends.

Operations Categories Reported on Today

Operations Category
Items Reported On
Mergers & Acquisitions
6
Supply Chain Issues
1
Inflation
6
Trade Issues and Numbers
5
Financial System Problems
2
Real Estate
6
Economic Growth
1
Bizdev-Partnering
4
Budgets-Budgeting
1
Taxes
2
Wages and Compensation
2
Investor Sentiment
3
Asset Price Change
8
Employment
3
Tech Development/Adoption
3
Operating Results
3
Political Policy Resistance
1

成熟製程產能過剩 中芯去年獲利大減45%

SMIC's profit dropped 45% last year due to overcapacity in mature process

Liberty Times Net | Local Language | News | Feb. 14, 2025 | UndeterminedOperating Results

SMIC reported a 45.4% decline in net profit last year, primarily due to reduced investment income and capital returns. Contributing factors include overcapacity in China's semiconductor industry and heightened US sanctions, which are expected to decrease chip manufacturing equipment purchases after three years of growth. The company generated approximately US$30 billion in revenue, a 27.7% year-on-year increase, but net profit attributable to the parent company fell to US$4.92 billion.

CEO Zhao Haijun noted the impact of the US tariff war, revealing that customers are stockpiling orders amid concerns over tariffs and geopolitical tensions. He cautioned of potential challenges in the latter half of the year, including a decline in order volume as demand shifts and intensified price competition resulting from excess production capacity.

Consulting firm TechInsights forecasts a 6% drop in China's spending on chip manufacturing equipment this year, reducing it to $38 billion and lowering its global market share to 20%. Analysts emphasize that, despite China's push for self-sufficiency in chip manufacturing, significant gaps remain in lithography systems as well as packaging and testing equipment.

美印關係再升級 莫迪今訪美會晤川普 將聚焦貿易、科技與地緣政治

US-India relations escalate again. Modi visits the US today to meet with Trump, focusing on trade, technology and geopolitics

Liberty Times Net | Local Language | News | Feb. 14, 2025 | Geopolitical Conflict and Disputes

Indian Prime Minister Narendra Modi is in the U.S. for a pivotal meeting with President Donald Trump to discuss trade, technology, and geopolitical issues affecting their bilateral relationship.

The talks will concentrate on enhancing economic ties, particularly in technology, with a focus on the H-1B visa program essential for Indian tech professionals. Collaborative initiatives regarding data flows and the digital economy are also on the agenda.

The meeting occurs amidst changing geopolitical dynamics, particularly concerning China's influence. Both leaders aim to reinforce the Quad alliance, comprising the U.S., India, Japan, and Australia, to address regional security challenges.

Modi's visit represents a significant opportunity to strengthen U.S.-India relations, promoting trade, technology cooperation, and addressing security concerns in the Indo-Pacific region.

駁斥抹黑 南市府:嚴打環境犯罪 絕不姑息

Refuting the smear campaign against the Taipei City Government: We will crack down on environmental crimes and will not tolerate them

Tainan City | Local Language | CityState | Feb. 14, 2025 | Pollution

The Tainan City Government's Environmental Protection Bureau responded to allegations from legislators Chen Zhaozi and Chen Jiahua, asserting they are part of a smear campaign. The Bureau clarified that Lin Fushun, responsible for environmental violations, has been ordered to clean up the waste, with Chanyuan Enterprise liable if he fails to comply.

In June 2013, the Bureau requested a cleanup plan from Ming Xiangxin Company. It dismissed claims of favoritism and emphasized its commitment to combatting environmental crimes with strict penalties for violations. The Bureau urged the public not to misinterpret facts or question the city's dedication to environmental issues.

The Bureau confirmed cooperation with prosecutorial bodies during the Xuejia slag case investigation, successfully executing cleanups in multiple areas. It stated that cleanup responsibilities would not yield financial gains for those involved and pledged immediate action for future cleanup opportunities.

During periods of inaction on slag removal, groundwater and heavy metal tests were conducted, consistently meeting safety standards. The Bureau committed to ongoing monitoring and enforcing cleanup obligations, recognizing potential negative impacts on company operations and employee livelihoods from any necessary demolitions.

Minister of Environment Peng Qiming acknowledged the need to block slag against rainwater infiltration and proposed collaboration with the State-owned Assets Administration. He commended Taipei City’s proactive measures regarding the issue, highlighting transparency in cooperation with judicial branches.

The Bureau reiterated a zero-tolerance policy toward environmental violations, presenting its actions on the Xuejia slag case as evidence of governmental accountability. Cleanup procedures have been publicly documented, marking a national precedent in governance, and Tainan City proclaimed itself as the first in Taiwan to complete illegal slag removal while rejecting malicious external accusations.

Try the Daily Briefing for your country of choice for two weeks--free of charge and with no obligation.

Have a service or subscription question? We'd be happy to hear from you.

How can we help?
Full Name:
Email Address:
Type of Inquiry:
Country of Interest:

Contact us for a free trial of the Daily Briefing for your country of choice.


We currently cover:
South Korea
Japan
China
Taiwan
Vietnam
India

info@eruditerisk.com

The Daily Briefing is delivered Monday through Thursday via email.

Each day's reports include a combination of:

Takes
Takes are our deep dives into a topic of enduring interest or concern. Takes include copious references to all the media resources we gathered to build them.

Developments
Developments are key issues and incidents being heavily reported on in country. These are the centers of local thought gravity around which everything else revolves.

Risk Media
Summaries and analysis of the most important risk issues reported on in media, arranged by risk category. Learn about risk trends and issues while they are developing--before they blow up.

Ops Media
Summaries and analysis of the most important operational issues reported on in media, arranged by operations category. See what's changing in your market, and what's not.

Government Releases
Government press and data releases on key economic data, regulation, law, intiatives, incidents. Straight from the government's press to your eyes in less than a day.

Embassy and Business Association Releases
Statements and news releases from foreign embassies and business/industry associations, including chambers of commerce.

The Daily Briefing is comprehensive!

The Daily Briefing can run 50-100 pages each day!

Luckily, Erudite Risk tailors every report specifically to you.

Content Filtering
We try hard to ensure that every piece of information included in each day's reports will be of interest to our readers.

To fulfill our goal of comprehensively monitoring the intelligence landscape and also keeping reports readable, we build big reports--then deliver only the information that applies to you.

Each Daily Briefing is a bespoke report matched to your concerns. Tell us what you want in it, or we can match it to your professional needs. It's that easy.