TSMC chair fears U.S.-China trade friction will hit Apple supply chain

Taipei, Morris Chang (???), chairman of the world's largest contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), said Sunday that the Apple supply chain could suffer if a trade war erupts between the United States and China.

In an interview with the Financial Times published on May 6, Chang warned that the escalating threat of higher tariffs between the two countries would adversely affect companies like his in the global supply chain.

"China does a lot of assembling of the final product, so the U.S.-China trade dispute may impact us also," said Chang, whose company supplies processors for the iPhone. "It is a new challenge and it is something that I have not had to face in the past, but my successors will have to face that risk. What they can do? I don't know."

According to the Financial Times, TSMC generates about half of its US$33 billion revenue from mobile devices.

In addition to TSMC, many other Taiwanese electronics firms are part of the Apple supply chain, including iPhone assemblers Hon Hai Precision Industry Co., Pegatron Corp. and Wistron Corp.; smartphone camera lenses supplier Largan Precision Co.; and metal casing maker Catcher Technology Co.

Recent market statistics here showed that Taiwanese suppliers to Apple account for about 40 percent of the local equity market's total capitalization.

Chang's comments in the Financial Times came after the U.S. called for a reduction of its trade gap with China by US$200 billion over the next two years and for China to suspend subsidies to advanced manufacturing sectors, during two days of negotiations in Beijing last week.

The demands came after weeks of escalating tensions between the world's two largest economies, which have been threatening to ramp up tariffs on each other.

The Financial Times also cited Taipei-based Yuanta Securities analyst Sam Kao as saying that Apple suppliers such as Hon Hai, Pegatron and Wistron, which do not have major production sites outside China, could face the most pressure from a trade war between the U.S. and China.

On Monday, TSMC told the Taiwan media that its operations have not been affected so far by the trade frictions between the U.S. and China but it was keeping a close eye on the bilateral negotiations and the resulting decisions.

Chang, nicknamed the "father of semiconductors" in the global industry, is planning to retire in June after 30 years with TSMC.

Source: Focus Taiwan News Channel