US Tariff Exemption Creates TSMC Joy over Chip Market Hope

The most notable chip producer, Taiwan Semiconductor Manufacturing Co. (TSMC), announced its stock was not subject to the 100% tariff imposed on the sale of chips by the US, and this resulted in the highest stock price ever recorded by TSMC on August 7, 2025. 

This exemption of tariffs, which was based on the significant investments that TSMC made in manufacturing facilities located in the US, has helped moderate the market fears and revitalize the technological industry in Taiwan which has cemented the central nature of the company in the global semiconductor supply chain, at a time when the level of trade tensions is at an all-time high.

Taiwan has a Good Backbone Economy

The tariff exemption granted by TSMC to Taiwan is much-needed relief to the export-based economy of the country. As the manufacturer of the most sophisticated chips applied in artificial intelligence and all kinds of high-tech operations, TSMC is the dominant contributor to the Taiwan index benchmark with close to 40% leverage. Its market fluctuations, therefore, play a major role in the rest of Taiwanese financial life. 

With the news of tariff exemption, TSMC stock surged 4.89% to NT$1,180, enhancing the Taiwan Stock Exchange by 2.4%, which was a good outperformance compared to the other markets in the region on the same day. 

The Taiwan dollar equally gained significant strength against the US dollar as much as 0.9% depicting optimistic investor mood and confidence in the Taiwanese technology-based economy.

This is growing in a background of worldwide trading tensions and protectionist actions that are on the rise. A tariff of up to 100% on imports of semiconductors manufactured in Taiwan was announced by the US in March 2025 as part of a larger plan to ensure the US can produce and guard important technology supply chains. 

But TSMC had marked a course to exemption with its blanket $165 billion investment in US semiconductor capacity, including manufacturing fabs, advanced packaging plants, and a research and development center in Arizona. 

The new production strategy to produce in the US is linked to US government policies trying to incentivize reshoring and onshoring in the semiconductor industry.

Lessons for Taiwanese and Regional Chipmakers

Minister Liu Chin-Ching of Taiwan National Development Council was insistent to make the point that the exemption granted Taiwan Semiconductor Manufacturing Company (TSMC) was a direct result of its operations within the US and offers some growth light at the end of the tunnel to other local companies that are likewise contending with the tariffs. United Microelectronics Corp. 

(UMC) is the second biggest chipmaker based in Taiwan and seeks to buffer against tariffs by tightening its relationship with Intel Corp in the US. These partnerships may be critical to the survival of Taiwanese companies as the trade barriers increasingly close.

Acting in a similar way, Samsung Electronics of South Korea that runs chip fabs in Texas also seem well geared not to see the tariffs as it can engage in the Apple American Manufacturing Program. This is a growing trend by large trade actors to strengthen their existing US manufacturing capacity or open new ones as a turnaround to trade tensions. 

Another major semiconductor manufacturing hub, Malaysia, has requested the US government to clarify on the implementation of tariffs though minimal impact is expected on it as the various companies involved in Malaysia are US based.

By expressing its readiness to restart negotiations over tariffs with Taiwan, the US government demonstrates the necessity of dialogue as one of the keys to keeping the global tech supply chain stable and resilient. The national development council of Taiwan forecasts a 3.1% economic growth rate in 2025 as a sign of optimism amid tariff headwinds. 

The main factor that drives this outlook is Taiwan technology exports which increased almost 8% during the second quarter of 2025, the highest rate in four years.

Market and Investor Sentiment

The tariff environment is fluid and not easy. As former US President Trump declared the 100% tariff strategy, exemptions of companies investing in US manufacturing (like Apple) point to incentive-based strategy. 

This action invites a renewed or first-time build-out of the US semiconductor manufacturing sector by the larger global manufacturers and could alter the worldwide chipmaking and supply patterns for many years to come.

Looking Ahead

Tariff exemption of TSMC is an important strategic triumph by Taiwan in the changing pattern of the semiconductor sector. The company has been making long-term investments in manufacturing footprint in the US, as well as on the priorities of the US government to attract semiconductor supply chains to the country, which makes TSMC less vulnerable to tariffs or trade frictions.

This development infuses stability and growth prospects into the semiconductor industry and economy of Taiwan at large. The fact that TSMC is the leader in manufacturing AI chips does not only strengthen the technological position of Taiwan but also guarantees a rather significant share of the market across the world. 

As long as the US-Taiwan dialogue on the economy remains positive and other firms follow the example of TSMC and invest in the US, it is in a good position to maneuver around tariffs without losing growth impetus in the semiconductor sector in Taiwan and the region.

However, threats still exist and the situation might change due to geopolitical shocks and changes in trade policies. In order to reduce these risks, Taiwan and its regional partners should continue their innovativeness, reinforce manufacturing presence in the US and diversify their supply chains. 

Continued government investment and Asian geopolitics will play a key role in ensuring Taiwan continues its legacy as a world champion in semiconductors.

In a nutshell, the tariff exemption of TSMC and a heavy investment in their US-based manufacturing facilities have brought about energy in the markets, alleviation of worries among investors as well as exposing the importance of Taiwan in the entire world semiconductor and supply-chain system. 

The August 7, 2025 share price at the company is a record, an indication of resilience and the unavoidable service the company offers to the global technology driven economy. 

The achievement highlights the transformational nature of aligned industrial strategies and responsive trade policies in protecting the vital sectors of technology in the face of global uncertainty.