Taiwan chip maker Vanguard says Trump’s threatened tariffs might gasoline inflation

By Wen-Yee Lee

TAIPEI (Reuters) – Taiwanese chip maker Vanguard Worldwide Semiconductor warned on Tuesday that U.S. tariffs on imported chips might spur inflation and impression world financial development, however mentioned it expects the direct impression on the corporate could be small.

U.S. President Donald Trump mentioned final week that he intends to impose auto tariffs within the neighbourhood of 25% and related duties on semiconductors and pharmaceutical imports, the most recent in a sequence of threats that would upend worldwide commerce.

Vanguard Chairman Leuh Fang instructed analysts on a post-earnings name that the corporate was adopting a “wait and see” stance because it was unclear how critical and much the Trump administration would go.

“If tariffs are applied … it can trigger many impacts, from inflation to a decline in end-product buying energy, and even have an effect on anticipated financial development,” he mentioned.

“This can have some impression on the worldwide semiconductor business, however we at present lack the power to foretell how the potential impression will develop.”

However the direct menace on Vanguard itself was anticipated to be “trivial”, he mentioned. Vanguard makes legacy, or mature node chips, which are utilized in automobiles and show panels.

“The proportion of our firm’s semiconductor merchandise straight exported to the U.S. and going through tariffs may be very low.”

The corporate is just not contemplating establishing a manufacturing unit within the U.S., he mentioned.

TSMC, the world’s largest contract chip maker that focuses on superior chips, is constructing factories in Arizona whereas some Taiwanese laptop computer and AI server makers are contemplating increasing into the U.S. to counter Trump’s tariffs.

TSMC owns 27.15 % of Vanguard’s shares.

Vanguard is amongst Taiwanese chip makers that are seeing Chinese language rivals consuming into their market share by slashing costs and embarking on aggressive capability growth plans.

Fang, nonetheless, mentioned that such strikes by Chinese language foundries, mixed with rising tensions between U.S. and China, have been prompting some American clients to strategically shift away from China since final 12 months and he anticipated the tempo of order transfers to Taiwan to proceed to accentuate.

“Chinese language corporations are increase unneeded capability in mature processes, resulting in vicious worth competitors and an absence of belief amongst many shoppers. The pattern of order transfers is extra evident amongst American clients, and it includes a number of clients, not only one,” mentioned Fang.

Vanguard posted a 19.4% year-on-year leap in income to T$115.53 billion ($3.52 billion) and a 48.7% leap in gross revenue to T$3.314 billion for the quarter ended Dec. 31.

Story Continues