TSMC’s new form and two weeks of tariff trauma

Hello from Taipei, everybody! That is Cheng Ting-Fang, your TechAsia host for this week.

It’s been a roller-coaster two weeks for a lot of provide chain executives and managers, with the world’s two largest economies slapping tariffs of 125 per cent or extra on one another and the US threatening “reciprocal” tariffs on most of its buying and selling companions and additional tightening AI chip export controls.

Key suppliers throughout Asia offering all the pieces from parts to last meeting for Apple, Samsung, HP, Dell, Amazon and Meta have been on name practically 24/7 to take care of the fallout — and with some shut contacts at these suppliers, I really feel like I’m sitting within the again seat watching this real-life drama unfold.

“I might need to see a psychiatrist for my mental health,” a supervisor at a element provider instructed me. “Before I went to sleep, customers said they needed to hold all US shipments the next day, but when I opened my eyes, an urgent notice had come saying they now wanted manufacturing to come back at full speed and to move all orders in the third quarter to now to take advantage of the 90-day reciprocal tariff pause.”

This is only one instance of the sorts of messages I’ve been receiving currently. The relentless tempo of those coverage modifications is punishing, and the uncertainty and strain much more so.

Fang Leuh, chair of TSMC’s affiliate chipmaker Vanguard Worldwide Semiconductor, was very open in regards to the challenges. He stated that earlier than Trump’s tariffs, his firm was eyeing “mild growth” for 2025, however now they should “revisit” that outlook. When requested about potential progress drivers for this yr, the chair stated there was “nothing to write home about”.

Yesterday night, I had a cellphone name with one other long-time business pal whose firm serves main PC makers. He instructed me that some new issues had emerged: even some merchandise made in China for non-US markets nonetheless want supplies from American suppliers, like 3M and DuPont. Such parts grew to become 125 per cent dearer in a single day as a result of China’s retaliatory tariffs. To make issues extra disturbing, some tech manufacturers have hinted that they might ask suppliers to chop costs within the second half of 2025, as shifting provide chains eat into their income.

For greater than 20 years, customers worldwide have been in a position to take with no consideration that top-tier tech merchandise like iPhones and MacBooks will arrive on time and at affordable costs thanks to an enormous, environment friendly electronics provide chain working across the clock. This golden period could already be coming to an finish.

I keep in mind loving a kids’s ebook known as Monty after I was little. Within the story, an alligator named Monty ferries a rabbit, a frog and a duck throughout the river to highschool daily. The trio depends on Monty however continuously criticises his swimming and pace. Then one morning, Monty is gone — the alligator is on trip. The three pals strive each approach conceivable to cross the river on their very own however fail, lastly realising simply how important Monty is.

By undermining the ultra-efficient international provide chain, the US now faces its personal “Monty moment”. The ripple results of this determination might be felt by the whole world.

TSMC’s new tech takes form

In an ever-changing geopolitical panorama, tech firms should proceed to innovate to outlive. Nikkei Asia’s Cheng Ting-Fang stories that TSMC is finalising the primary design for its next-generation chip packaging expertise, which includes a radical change in substrate form to assist main AI chip builders corresponding to Nvidia, Amazon and Google increase computing efficiency.

The chipmaker is concentrating on small-volume manufacturing of the so-called panel-level packaging in 2027, with the primary pilot growth line within the Taiwanese metropolis of Taoyuan. Sources instructed Nikkei Asia that the primary era of this packaging technique will use a 310-mm-by-310-mm sq. substrate, the fabric on which chips are constructed.

If profitable, TSMC’s transfer to a radically completely different chip packaging strategy will considerably affect the product and R&D highway maps of many tools producers. US, Japanese and Taiwanese chip instrument makers have already began redesigning their machines to accommodate the brand new type issue. This square-shaped substrate can combine extra AI superchips than conventional spherical wafers, enabling much more highly effective AI computing.

Optical advance

Apple provider TDK is claiming a significant breakthrough in expertise to hurry up knowledge processing and remedy a key bottleneck for the growth of generative synthetic intelligence, writes the Monetary Occasions’ Harry Dempsey in Tokyo.

As soon as well-known for cassette tapes with its brand seen on ads in London’s Piccadilly Circus, the Japanese group believes its world-first spin picture detector — a melding of optical, digital and magnetic parts — might be a gamechanger for reinforcing knowledge transmission and decreasing the facility consumption of information centres.

An illustration carried out with Nihon College confirmed a response time of 20 picoseconds, or 20 trillionths of a second, which is 10 occasions quicker than conventional semiconductor-based picture detectors.

Though the trail to commercialisation is ready to take as much as 5 years and require co-operation from built-in circuit designers, TDK’s new tech highlights how the switch of information between processing models has turn into one of many key points in creating generative AI.

Different business leaders, together with the world’s largest chipmaker TSMC, are additionally throwing assets at fixing the issue by way of next-generation silicon photonics that make use of optical applied sciences to beat the present constraints of electronics.

Stay within the second

Shares of main Chinese language and Taiwanese tech suppliers took a beating within the days and weeks after Trump unleashed his “reciprocal” tariffs, providing a gauge of the provision chain disruption this coverage is predicted to convey.

Some executives even say the uncertainty now exceeds even that seen through the Covid-19 pandemic, Nikkei Asia’s Lauly Li and Cheng Ting-Fang write. A supervisor at one provider stated they’re dwelling as if there is no such thing as a tomorrow as a result of extraordinarily low visibility of future demand.

With the 90-day pause on most “reciprocal” tariffs and a short lived exemption for smartphones and laptops, manufacturers corresponding to HP, Dell and Meta are urging suppliers to spice up manufacturing for the US market. Apple, in the meantime, has been asking suppliers to construct extra merchandise since earlier this yr as a result of tariff uncertainties and is auditing suppliers’ non-China manufacturing amenities. The corporate has additionally requested suppliers to arrange to assemble over 90 per cent of its new iPhones, set to launch later this yr, in India for the US market.

Nonetheless, sport consoles weren’t fortunate sufficient to be lined by the US tariff exemptions, which means models shipped from China might face costs as excessive as 145 per cent. This poses a big problem for Nintendo’s extremely anticipated Swap 2, as nearly all of its manufacturing at the moment takes place in China, as Li and Cheng report.

Come collectively

Two heads are higher than one. This line of considering has impressed Japanese automakers together with Toyota, Nissan and Honda to come back collectively to develop a standardised design for next-generation automotive chips by March 2029, Ryohtaroh Satoh of Nikkei Asia writes.

This initiative, being spearheaded by the Automotive Software program Platform and Structure (ASRA) consortium, goals to solidify Japan’s automotive management and improve its competitiveness towards Chinese language rivals like BYD, which have gained market share in key areas due to their line-ups of cheaper, extra electrified choices.

Key chip and element suppliers, corresponding to Denso and Renesas Electronics, are additionally on board. By standardising automotive chips, these firms hope to achieve stronger bargaining energy and better manufacturing volumes with main contract chipmakers like TSMC, which can in any other case prioritise extra profitable AI chip orders over these for automotive purposes.

Urged reads

#techAsia is co-ordinated by Nikkei Asia’s Katherine Creel in Tokyo, with help from the FT tech desk in London.

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