With tariff risks continuing to persist, semiconductor companies have started taking action to hedge against potential supply chain disruptions.
Since Donald Trump took office, the U.S. tariffs on China, Canada, and Mexico have changed the global trade landscape. On February 1, the U.S. government announced a 25% tariff on goods imported from Canada and Mexico (with a 10% tariff on Canadian energy products), and a 10% tariff on goods imported from China, effective February 4. The total value of imports from these three countries accounts for about 45% of U.S. goods imports and 5% of U.S. GDP.
As tariff risks continue to loom, semiconductor companies have begun to act in order to hedge against potential supply chain disruptions.
01
OEM Manufacturers Rush to Place Orders
According to industry insiders, since the end of 2024, OEMs have increased their procurement of early components and processors in preparation for possible U.S. tariff hikes.
Taiwanese chip manufacturers recently confirmed this trend during their earnings calls, highlighting a noticeable rise in the replenishment demand for PC and network chips, particularly in the mid-range and entry-level markets. The early procurement rush extended into the first quarter, breaking seasonal trends and raising expectations for stronger-than-usual performance. However, industry executives warned that excessive early shipments might trigger inventory adjustments later, and the outlook for the second quarter remains uncertain.
Taiwanese IC design companies Realtek Semiconductor and Parade Technologies pointed out that PC OEMs have explicitly requested faster chip deliveries, and although orders were lighter during the Lunar New Year period, first-quarter order momentum remains strong. Parade Technologies reported that there were no significant signs of a decline in demand for the second quarter, while Realtek acknowledged that early procurement would inevitably lead to inventory adjustments—it’s just a matter of time.
Market observers believe the second-quarter trend will be a key indicator for chip manufacturers in 2025. If order volumes remain steady or improve, it could signal market confidence. However, if inventory clearing accelerates, the growth outlook for 2025 might still be lukewarm.
Although most industry forecasts predict that the PC market will grow by 5% in 2025, geopolitical risks are greater than in 2024. However, with the adoption of AI PCs, specification upgrades, and replacement cycles, there remains upward potential.
02
Server Manufacturers Consider Shifting Production, Consumer Electronics Stay Put
In stark contrast to the positive attitude of the server supply chain, the consumer electronics industry remains calm, with laptop brand suppliers and ODMs showing little interest in shifting production to the U.S.
Acer Chairman and CEO Jason Chen recently expressed concern over U.S. tariffs on neighboring countries Canada and Mexico, prompting suppliers that had moved to Mexico to reconsider their positions. He stated that Acer would manage channel inventory in the short term while exploring the feasibility of producing laptops in the U.S. in the long term.
Industry insiders noted that while brand laptop suppliers will certainly evaluate the situation after further analysis of their supply chains, the actual likelihood of implementation remains uncertain. The server supply chain is actively seeking production locations in the U.S., while the consumer electronics supply chain seems indifferent to these developments.
Sources from the laptop components industry said that current brand customers are not interested in U.S. production, and ODMs are avoiding new initiatives, preferring to maintain existing operations.
Sources from the component industry believe that under Trump’s tariffs, the consumer electronics supply chain is more stable than the server supply chain for four reasons:
First, the consumer electronics supply chain includes production facilities in Taiwan, Vietnam, Thailand, and Malaysia, which have not been impacted by recent U.S. tariff hikes, so there is no urgency for operational changes.
Second, the cost of shifting production to the U.S. is minimal compared to current tariffs. Whether facing a 10% or 25% tariff, U.S. production costs would rise by at least 30%, significantly reducing the appeal of domestic relocation. Some supply chain participants humorously stated that they would reconsider only if tariffs reached 60%.
Third, server racks are large and heavy, prompting many server supply chain companies to establish operations in Mexico, benefiting from Mexico’s abundant labor force and the advantages of the North American Free Trade Agreement. In contrast, consumer electronics focus on lightweight, compact designs, and while logistics costs exist for Southeast Asian production, it remains competitive.
Fourth, consumer electronics have low unit prices and margins, so mass production is necessary for profitability. While the U.S. is the largest consumer market globally, laptop sales account for only 30%, and not all laptops sold in the U.S. need to be produced domestically. Unless customers offer attractive incentives, the industry has little enthusiasm for setting up factories in the U.S.
Sources from the laptop industry pointed out that, of the three countries Trump initially imposed tariffs on—Canada, Mexico, and China—only a few manufacturers operate in Mexico, and none in Canada. In this context, maintaining current operations seems like the most practical strategy.
03
TSMC Plans to Raise Prices by 15%
According to the Business Times, TSMC may raise the prices of its most advanced semiconductor wafers by up to 15% this year. The main factors behind this prediction are rising production costs and the potential U.S. tariffs.
Previously, analysts had expected wafer prices to rise by 5% to 10% in 2025. The new forecast suggests that the upcoming tariffs might accelerate cost increases and weaken the performance improvements of new products.
The main factors behind this price increase plan include significant increases in production costs and the long-term commitment to U.S. tariffs on Chinese products by U.S. President Trump. Although TSMC’s products have not been directly impacted by the tariffs, China’s key position in the global electronics supply chain means that Trump’s tariff policies will indirectly raise TSMC’s production costs.
It is predicted that TSMC will start raising wafer prices for smaller nodes, beginning with the 7nm node. Currently, the cost of a 7nm wafer is about $10,000, while Apple, one of TSMC’s largest customers, pays up to $18,000 for a 3nm wafer. The implementation of tariffs could further push the price of a 3nm wafer to around $20,000 to $23,000.
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