Tariff Fears And Ease In Demand Hype Slows Semiconductor Expansion

Benzinga03-28

Leading chipmakers and packagers, including Taiwan Semiconductor Manufacturing Co (NYSE:TSM) and Intel Corp (NASDAQ:INTC), have slowed the pace of their expansions in Japan and Malaysia due to weaker demand for older chips and tariff uncertainties, Nikkei Asia reported on Friday.

Chip packagers Advanced Semiconductor Engineering and Siliconware Precision Industries (SPIL) also halted their Malaysian expansions as numerous chip suppliers pivoted their investment strategies.

January reports claimed Taiwan Semiconductor was set for full-capacity production in the U.S. and Germany after commercializing its debut Japanese chip plant in Kikuyo, Kumamoto Prefecture, last December.

Also Read: Meta Taps Taiwan Semiconductor To Build AI Chip, Aims To Cut Nvidia Dependence By 2026

In 2023, Taiwan Semiconductor had 67% of the global market share in contracted semiconductor manufacturing and ~80% in advanced technology products.

Taiwan Semiconductor Chairman and CEO C.C. Wei had emphasized that its latest $100 billion investment plan (on top of the $65 billion already committed) came from customer demand for its chips, which are critical for powering everything from the latest artificial intelligence systems to smartphones. Wei also emphasized that the chipmaker remains committed to its target of building 11 production lines in Taiwan in 2025.

Since his presidential campaign, President Donald Trump has verbally attacked Taiwan’s near-dominance in advanced chip manufacturing and threatened tariffs on chip imports, prompting Taiwan Semiconductor to boost U.S. investments.

Additionally, the U.S. Chips Program Office faces a 40% staff cut as Trump’s strategy shifts from Biden’s semiconductor investment approach.

HSBC analysts told Bloomberg how the AI frenzy, market volatility, and uncertainty prompted investors to shift focus to non-tech.

The emergence of Chinese AI startup DeepSeek, which claimed to create AI models at a fraction of rivals’ cost, have also added to investor anxiety.

Intel is reportedly strategizing to drive its chip design and broaden its foundry business, with the potential of securing clients such as Nvidia Corp (NASDAQ:NVDA) and Broadcom Inc (NASDAQ: AVGO).

Price Action: TSM stock is down 0.26% at $167.80 premarket at last check Friday.

Also Read:

Marvell Launches Next-Gen Connectivity to Meet Rising AI Demands in Data Infrastructure

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Tariff Fears And Ease In Demand Hype Slows Semiconductor Expansion

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