As the United States reportedly moves to ask Taiwan's chip giant TSMC to open a joint venture with Intel or face tariffs, Neumonda COO Marco Mezger warns of the potential downsides ahead for businesses in both countries.
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00:00The United States is reportedly asking TSMC and Intel to start a joint venture or TSMC
00:08face tariffs for their semiconductors.
00:11What is your opinion about this reporting?
00:14I think when I heard the first time about the potential tariffs on TSMC, I was actually
00:19quite surprised because I think we need to understand when you put the tariffs on, you
00:25know, and I think they said it on a broader base on semiconductor, but you need to divide.
00:30So you basically you have chips, you have kind of subsystem and you have computing systems.
00:38And so it has not been really clear what is exactly targeted.
00:42But one thing what I can tell you, all three would affect American companies to a quite
00:48big extent.
00:50We are talking now about roundabout 50, 55 billion U.S. dollars, which could be affected.
00:56So it's not clear what the Trump administration wants to put the tariffs on, pure chips, modules
01:03or full systems.
01:05And because these semiconductors are so vital to the economy and everyday technology, ultimately
01:12North American businesses will still need these semiconductors.
01:17So what can TSMC do in the instance of tariffs?
01:21Will they pass the cost down to consumers?
01:24I think they will pass the tariffs down to the consumers.
01:28They cannot suck this up.
01:30So I think the point is, like, if there are tariffs which will be imposed, the end customer
01:36is normally the ones who has to pay the bill.
01:39And especially, you know, if there are no alternative to produce, and I have to say
01:45on large scale in the USA.
01:47So USA with the TSMC perhaps with the committed investment, which have been also attracted
01:53by the CHIPS Act from the USA.
01:56Now, recent reports basically say that the Trump administration potentially might also
02:05change some of the regulations looking forward, but potentially also backward.
02:11And I think this would be a bad sign.
02:13Because I think if companies make this decision based on a government statement, they rely
02:19on this because without these incentives, they probably would not have decided to build
02:25up a factory there.
02:27Because it's higher cost, higher labor cost.
02:29TSMC will not be the only company affected by these proposed tariffs.
02:35There are other smaller but still vital semiconductor manufacturers in Taiwan.
02:41How would these other companies who do not have the weight that TSMC does react?
02:45I mean, these companies, I really feel sorry for them.
02:49Because you are talking about companies, they have major process nodes.
02:52I mean, there I would use the term major process nodes about 20 nanometer, 25, 30 nanometer,
02:59which is which is used here, you have on another front, extreme competition from China, because
03:06China has no access to the newest cutting edge technology.
03:10As you know, they cannot get UV technology.
03:13But they find a way, for example, for DUV technology.
03:17Now when the Taiwanese companies now, in addition to this, are also faced with additional tariffs,
03:26you know, moving to the USA or serving US customers, I think it's a lot of pressure
03:32for them.
03:33It's a huge challenge.
03:34I cannot imagine that it would make so much sense, you know, to to build up major process
03:42node factories in the USA on large scale.
03:46Not only because of the questioning, you know, of the just focusing on this in the USA, but
03:52also knowing how much capacity has been built up the last three years in China.