Trump's threat of Taiwan chip tariffs could give Nvidia a fresh headache after DeepSeek

Core View - President Donald Trump's proposed tariffs on Taiwan-made semiconductors could significantly impact Nvidia and other US tech companies reliant on TSMC for chip manufacturing [1][2][9] - The tariffs, potentially ranging from 25% to 100%, aim to bring chip production back to the US but may lead to increased costs for companies like Nvidia, Apple, and AMD [2][7][9] - Nvidia faces a double blow as its shares dropped 17% following DeepSeek's AI model release, which caused a $589 billion loss in market value [1][3] Industry Impact - The US semiconductor industry is less developed and more expensive compared to Taiwan, making a rapid shift in production challenging [2][7] - TSMC has already begun moving some operations to the US, including a $65 billion initiative to build chip manufacturing plants in Arizona [6][8] - The US and China are intensifying their competition for global technological dominance, particularly in AI, with Trump announcing a $500 billion initiative to boost US AI infrastructure [11] Company Impact - Nvidia, one of TSMC's largest customers, is particularly vulnerable to the proposed tariffs due to its heavy reliance on TSMC for AI chip manufacturing [1][3][9] - DeepSeek's new AI model, which claims similar performance to OpenAI's frontier model with fewer and less advanced chips, has raised concerns about declining demand for Nvidia's chips [4] - Apple and AMD, also significant TSMC customers, could face increased costs if tariffs are imposed, potentially affecting hardware prices [2][7] Geopolitical Context - Taiwan emphasizes the "complementary" relationship between its semiconductor industry and the US, highlighting the US-designed, Taiwan-foundry model as a win-win for both economies [10] - The potential for conflict between China and Taiwan poses a significant risk to the US tech sector, as a war could disrupt the supply of vital chips [5] - The COVID-19 pandemic has exposed vulnerabilities in global supply chains, further complicating the US's reliance on Taiwan for semiconductors [5]