Secondly, prices can only foreign companies are starting to produce fleas in the United States if it becomes cheaper than doing it elsewhere. But higher American labor costs and the lack of semiconductive sophisticated supply chain mean moving, there will be years or even decades, and there is little guarantee that these American outposts will be profitable. Faced with American prices, it could be more logical for Taiwanese companies like TSMC to simply move production in a third country rather to avoid paying them.
But the Trump administration could choose to expand prices to all countries, effectively making production in the United States the only viable alternative. It could also apply prices to all end products that contain Taiwanese tokens.
This last idea would constitute an important disruption of the semiconductor industry. A single smartphone can have dozens of interior chips responsible for a range of different functions; A car can potentially have thousands. To determine which of them have taiwan components, how much these components must be taxed and how difficult it could be to find replacement products would exercise a heavy burden on final products companies.
Semiconductor companies are probably not prepared for such a scenario, especially since their products have been mainly spared prices in the past. “The industry around the world has never treated flea tariffs like this before,” said an initiate of the Taiwan-based semiconductor industry who publishes public comments under the alias Hsu Mei-Hu. “It is theoretically possible, but almost impossible in practice.”
Policy would oblige companies like Apple to ask each of their suppliers the cost of the many types of chips they use, just to determine the appropriate amount of prices to be declared. “And after declaring, how do customs inspect him?” If I just put a random value, how do customs know? Said HSU.
The Biden Administration had previously discussed the use of components’ rates against Chinese flea manufacturers to weaken the country’s semiconductor industry and protect US national security. But one of the main arguments against the idea was that it would be logistically difficult to implement, explains Miller.
Miller says that components’ prices are certainly under study in Washington again this time, but it would be even more difficult to apply them on imports of Taiwanese fleas because they play a much wider and more important role than Chinese chips. “If you were concerned about the administrative complexity of the prices of components only vis-à-vis China, you should be even more concerned about administrative complexity with Taiwan,” he said.
Biggest losers
TSMC should lose fewer potential American rates than other companies because of its unrivaled weight in the industry. TSMC is currently around 90% of the most advanced fleas in the world, and its production lines work at full capacity. If Trump increases the prices and it forces the TSMC to increase its prices, the company could lose certain orders to competitors, but the experts say that it is not really a great concern.
But it will probably be difficult for TSMC customers to quickly find alternatives. Even if companies like Samsung and Intel have carried out comparable know-how in the manufacture of high-end fleas to a certain extent, it would take time, expensive and risky to remove mature production processes outside TSMC factories. Thus, rather than opting for another flea manufacturer, American companies like Apple and Nvidia are likely to continue to compete in the bill for TSMC products, and finally transmit higher costs to their customers.
