By Wen-Yee Lee
TAIPEI (Reuters) – Taiwanese chip maker Vanguard International Semiconductor warned on Tuesday that U.S. tariffs on imported chips could spur inflation and impact global economic growth, but said it expects the direct impact on the company would be small.
U.S. President Donald Trump said last week that he intends to impose auto tariffs in the neighbourhood of 25% and similar duties on semiconductors and pharmaceutical imports, the latest in a series of threats that could upend international trade.
Vanguard Chairman Leuh Fang told analysts on a post-earnings call that the company was adopting a “wait and see” stance as it was unclear how serious and far the Trump administration would go.
“If tariffs are implemented … it will cause many impacts, from inflation to a decline in end-product purchasing power, and even affect expected economic growth,” he said.
“This will have some impact on the global semiconductor industry, but we currently lack the ability to predict how the potential impact will develop.”
But the direct threat on Vanguard itself was expected to be “trivial”, he said. Vanguard makes legacy, or mature node chips, that are used in cars and display panels.
“The proportion of our company’s semiconductor products directly exported to the U.S. and facing tariffs is very low.”
The company is not considering setting up a factory in the U.S., he said.
TSMC, the world’s largest contract chip maker that focuses on advanced chips, is building factories in Arizona while some Taiwanese laptop and AI server makers are considering expanding into the U.S. to counter Trump’s tariffs.
TSMC owns 27.15 percent of Vanguard’s shares.
Vanguard is among Taiwanese chip makers which are seeing Chinese rivals eating into their market share by slashing prices and embarking on aggressive capacity expansion plans.
Fang, however, said that such moves by Chinese foundries, combined with growing tensions between U.S. and China, were prompting some American customers to strategically shift away from China since last year and he expected the pace of order transfers to Taiwan to continue to intensify.
“Chinese companies are building up unneeded capacity in mature processes, leading to vicious price competition and a lack of trust among many customers. The trend of order transfers is more evident among American customers, and it involves multiple customers, not just one,” said Fang.
Vanguard posted a 19.4% year-on-year jump in revenue to T$115.53 billion ($3.52 billion) and a 48.7% jump in gross profit to T$3.314 billion for the quarter ended Dec. 31.
($1 = 32.7840 Taiwan dollars)
(Reporting by Wen-Yee Lee; Editing by Kim Coghill)
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