Chip tariffs could hit by late June: What’s impact on fab construction costs and TSMC?

The US Department of Commerce’s public comment period on proposed semiconductor tariffs closed on May 7. Notably, according to Commercial Times, major players like SK hynix and HP have weighed in. With a summary report expected later, the industry is now bracing for tariffs that could kick in as early as late June, the report adds.

As the impact of tariffs on semiconductor production costs has been a key topic of discussion, the report, citing the Semiconductor Industry Association (SIA), warns that a 1% increase in duty rates on semiconductor manufacturing inputs could raise the overall cost of constructing a fab by 0.64%.

As Commercial Times highlights, under a 10% tariff scenario, TSMC would need to invest an additional USD 6.4 billion to meet its original USD 100 billion target.

SIA also stresses that building and operating fabs in the US is already 30-50% more expensive than in Asia. Tariffs on equipment and materials would further widen this gap, Commercial Times notes.

Meanwhile, the report states that, according to SIA, for every USD 1 increase in chip prices, end products containing semiconductors would need to rise by USD 3 to maintain existing profit margins.

Potential impact of semiconductor tariffs
Industry sources believe mature-node chips would be most affected, as mentioned in the report. In contrast, chips manufactured with advanced nodes may be subject to phased tariffs or a tariff-rate quota (TRQ) system, allowing implementation to align with the ramp-up of US production capacity.

As indicated by the report, mature-node chips account for over 80% of global output by volume but generate only about 40% of revenue. Yet, these chips support downstream industries worth more than USD 10.8 trillion, making semiconductor tariffs one of the most disruptive forces in the global tech ecosystem.

Commercial Times suggests that Trump may introduce steep tariffs on imported chips, with rates reportedly ranging from 25% to 100%. Analysts cited in the report believe the tariffs could be based on the “wafer-out” location—that is, where the chips are physically manufactured.

-- TrendForce, Taiwan.