A.M. Edition for April 17. Chip giant TSMC beat quarterly earnings estimates today, posting a 60% jump in profits. But can the stars of the semiconductor industry sustain their momentum as Washington limits what can be exported to China and mulls new chip tariffs? UBS head of Taiwan research Randy Abrams weighs in. Plus, Japan and Italy try to find common ground with the White House on trade. And WSJ markets reporter Chelsey Dulaney explains why the dollar’s recent slide is becoming the rest of the world’s problem. Luke Vargas hosts. Sign up for the WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices
Chapter 1: What did TSMC report in its quarterly earnings?
Should the Chinese market remain off-limits, it could spell challenging times ahead for the biggest names in semiconductors. Though for one of the hottest sectors in recent years, there continues to be ample news to get excited about, including from Taiwan Semiconductor Manufacturing Co.,
the world's largest contract chipmaker, whose clients include Apple and Nvidia, reported earnings this morning, beating analyst estimates on a 60% jump in profits. Randy Abrams is head of Taiwan research at UBS, and he joins us this morning from Taipei. Randy, what jumped out to you from TSMC's latest update?
We've just gotten off the earnings call on a week of rather rocky updates from leading names in the chips industry.
They are the largest outsourced semiconductor manufacturer, really for a lot of the major chip companies, NVIDIA, Qualcomm, Broadcom, Apple. And for that, they set the stage for how the outlook is. We've seen in recent weeks, Trump has postponed some of the reciprocal tariffs. And he's also on some of these tech products in the last week. also put them on hold.
Now he's indicated that could come back, that the reciprocal tariffs in 90 days may come back. And also some of these tech semiconductor and hardware tariffs could come back on.
So the message for the supply chain is to continue to order components, to continue to build products, and essentially make their deliveries with that uncertainty, whether the tariff they're going to be paying in the future in a couple months may be higher. So to that extent, I think TSMC's main message is, hey, our orders have not really changed. We still see good strength.
They guided a strong second quarter. They did put an important caveat that they need to come back to us in three months as we get closer to second half to see what is just what tariffs come back on. And by that point, do we have any sign of some moderation?
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Chapter 2: How are export restrictions affecting the semiconductor industry?
What is the sense about the options that might exist for de-risking? TSMC has been out there talking about its investments in the U.S. Do they feel confident what they've done so far is enough to, I don't know, score them an exemption maybe from U.S. tariff action? Or might they need to do more? And maybe should they for other reasons in the future?
TSMC really was on the front foot or the gas on. to engage Trump to say, look, how can we do more? Part of it because I think their customers are feeling a bit more of the pressure to have more of a U.S.-based supply chain. So that is encouraging TSMC to go a bit faster into Arizona. So they're doing what they can.
Now, I'll say their hope, I think, for doing that is, can this help mitigate some of the tariffs? Now, that comes back to the government side. The government with key players in Taiwan, where TSMC is included,
are trying to go to us with negotiation leverage and it's what can we bring to us in the nvidia press release it really telegraphed that spill which is now tied to ase the biggest packager in taiwan is part of that us investment that was kind of a new announcement new investment that we hadn't heard about before and then on the hardware and assembly you're starting to see in the releases more of the comments about hanhai like foxconn hanhai which
seven, eight years ago talked about Wisconsin and doing production. Well, now those facilities start to come back in to do server assembly. Others like Quan and Wistron also talk about server assembly in the US.
So that's what I'd kind of say what Taiwan will try to do more of to mitigate their level of reciprocal tariff or semiconductor tariff is offer what type of business arrangements we can do to help the US reshore some of the supply chain.
Randy, the big story thus far this week has been these export restrictions affecting NVIDIA and AMD, though President Trump has signaled more U.S. tariffs specifically on semiconductors could be coming potentially as soon as this week. That then is the next storyline we should be watching for. What are you expecting? What potential impact should investors be bracing for here?
If it's semiconductors alone, that's actually somewhat manageable. And reason for that, Taiwan last year exported about 37 billion, which sounds like a big number, 37 billion of chips. But if you were to actually take into account all the production coming out of TSMC, from Micron, from UMC, it's about $250 billion worth of chips. So it's only about 15% of chips ship as a raw semiconductor.
the bigger risk would be all of these tech products, whether it's a chip or it's the hardware, whether it's a notebook or a server or a smartphone, as a bundle, we're going to put a tech tariff on. So do we get a, like the reciprocal tariff, a tech tariff where US says, hey, you have to reshore. I don't care if it's a chip or the hardware.
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Chapter 3: What are the potential impacts of new U.S. tariffs on semiconductors?
I'm going to put a, say, call it 25% tariff on no matter where it ships from on a tech product. That would be the type of scenario that ends up a bigger outcome for the supply chain. So I'd say chips alone, somewhat manageable.
If it's chips plus hardware, I think then you're going to see the supply chain try to negotiate areas of relief to at least mitigate how much impact it could have on demand.
Yet more importance hanging on every word coming out of Washington. Randy Abrams is the head of Taiwan research at UBS and was joining us this morning from Taipei. Randy, thanks so much for being with us on What's News. Okay, thank you, Luke.
Coming up, we'll look at the effect a weak dollar is having on the global economy and preview today's White House visit by Europe's Trump whisperer, Italian Prime Minister Giorgio Maloney. Plus, the rest of the day's news after the break.
Chapter 4: What strategies are semiconductor companies using to mitigate tariff risks?
Chapter 5: How is the dollar's slide affecting global markets?
We've just gotten off the earnings call on a week of rather rocky updates from leading names in the chips industry.
They are the largest outsourced semiconductor manufacturer, really for a lot of the major chip companies, NVIDIA, Qualcomm, Broadcom, Apple. And for that, they set the stage for how the outlook is. We've seen in recent weeks, Trump has postponed some of the reciprocal tariffs. And he's also on some of these tech products in the last week. also put them on hold.
Now he's indicated that could come back, that the reciprocal tariffs in 90 days may come back. And also some of these tech semiconductor and hardware tariffs could come back on.
So the message for the supply chain is to continue to order components, to continue to build products, and essentially make their deliveries with that uncertainty, whether the tariff they're going to be paying in the future in a couple months may be higher. So to that extent, I think TSMC's main message is, hey, our orders have not really changed. We still see good strength.
They guided a strong second quarter. They did put an important caveat that they need to come back to us in three months as we get closer to second half to see what is just what tariffs come back on. And by that point, do we have any sign of some moderation?
What is the sense about the options that might exist for de-risking? TSMC has been out there talking about its investments in the U.S. Do they feel confident what they've done so far is enough to, I don't know, score them an exemption maybe from U.S. tariff action? Or might they need to do more? And maybe should they for other reasons in the future?
TSMC really was on the front foot or the gas on. to engage Trump to say, look, how can we do more? Part of it because I think their customers are feeling a bit more of the pressure to have more of a U.S.-based supply chain. So that is encouraging TSMC to go a bit faster into Arizona. So they're doing what they can.
Now, I'll say their hope, I think, for doing that is, can this help mitigate some of the tariffs? Now, that comes back to the government side. The government with key players in Taiwan, where TSMC is included,
are trying to go to us with negotiation leverage and it's what can we bring to us in the nvidia press release it really telegraphed that spill which is now tied to ase the biggest packager in taiwan is part of that us investment that was kind of a new announcement new investment that we hadn't heard about before and then on the hardware and assembly you're starting to see in the releases more of the comments about hanhai like foxconn hanhai which
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Chapter 6: What are the implications of the U.S.-China trade relationship for chip makers?
seven, eight years ago talked about Wisconsin and doing production. Well, now those facilities start to come back in to do server assembly. Others like Quan and Wistron also talk about server assembly in the US.
So that's what I'd kind of say what Taiwan will try to do more of to mitigate their level of reciprocal tariff or semiconductor tariff is offer what type of business arrangements we can do to help the US reshore some of the supply chain.
Randy, the big story thus far this week has been these export restrictions affecting NVIDIA and AMD, though President Trump has signaled more U.S. tariffs specifically on semiconductors could be coming potentially as soon as this week. That then is the next storyline we should be watching for. What are you expecting? What potential impact should investors be bracing for here?
If it's semiconductors alone, that's actually somewhat manageable. And reason for that, Taiwan last year exported about 37 billion, which sounds like a big number, 37 billion of chips. But if you were to actually take into account all the production coming out of TSMC, from Micron, from UMC, it's about $250 billion worth of chips. So it's only about 15% of chips ship as a raw semiconductor.
the bigger risk would be all of these tech products, whether it's a chip or it's the hardware, whether it's a notebook or a server or a smartphone, as a bundle, we're going to put a tech tariff on. So do we get a, like the reciprocal tariff, a tech tariff where US says, hey, you have to reshore. I don't care if it's a chip or the hardware.
I'm going to put a, say, call it 25% tariff on no matter where it ships from on a tech product. That would be the type of scenario that ends up a bigger outcome for the supply chain. So I'd say chips alone, somewhat manageable.
If it's chips plus hardware, I think then you're going to see the supply chain try to negotiate areas of relief to at least mitigate how much impact it could have on demand.
Yet more importance hanging on every word coming out of Washington. Randy Abrams is the head of Taiwan research at UBS and was joining us this morning from Taipei. Randy, thanks so much for being with us on What's News. Okay, thank you, Luke.
Coming up, we'll look at the effect a weak dollar is having on the global economy and preview today's White House visit by Europe's Trump whisperer, Italian Prime Minister Giorgio Maloney. Plus, the rest of the day's news after the break.
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