Taiwan Semiconductor Firms Face Uncertain Q3 Amid US Tariff Tensions

Several semiconductor firms in Taiwan are entering the third quarter with a sense of caution, even though it is traditionally a period of high demand. This apprehension stems from the US-imposed tariffs that have cast doubts over the industry's future. According to a report by Focus Taiwan, MediaTek Inc., a prominent smartphone IC designer, attributed the flux of orders from clients in the first half of the year to concerns over US tariffs, consequently reducing the room for the usual seasonal uptick in demand. The company anticipates a 7 to 13 percent decline in third-quarter revenue compared to the previous quarter, estimating figures between NTD 130.1 billion and NTD 140 billion.

The US tariff plan, initially proposed on April 2, suggested a hefty 32 percent duty on Taiwanese goods. The introduction was delayed twice before finally setting a 20 percent rate effective last Friday. President Donald Trump's statements about a potential 100 percent tariff on imported semiconductors have further amplified the anxiety within the industry, although exemptions might apply to manufacturers with US operations. Similar sentiments are echoed by other Taiwanese chipmakers like PixArt Imaging Inc. and Novatek Microelectronics Corp., who have noticed a deceleration in demand as clients had placed orders earlier due to tariff concerns.

The report also highlighted that the Taiwan dollar appreciated 10.97 percent against the US dollar in the second quarter, ending June. This strengthening of the currency has strained export revenues and caused foreign exchange losses for several companies. While there has been a slight easing in the current quarter, the Taiwan dollar is expected to remain stronger than last quarter's average, thus continuing to pressure earnings. However, not all metrics are downbeat; Taiwan Semiconductor Manufacturing Co. (TSMC) is optimistic about the robust demand for artificial intelligence applications, forecasting an 8 percent increase in third-quarter revenue from the second quarter. For 2025, TSMC projects a 30 percent revenue growth in U.S. dollar terms, nearly doubling the forecasted global semiconductor industry rise of 15.4 percent.

(With inputs from agencies.)