AI Lifts TSMC, Export Controls Hammer NVIDIA

A tale of two chips

TSMC Profits Surge

Taiwan Semiconductor Manufacturing Co. delivered a robust first-quarter earnings report, underscoring its strategic insulation—so far—from the deepening crosscurrents of global trade friction.

Net income surged 60% year-over-year to 361.56 billion New Taiwan dollars (NT$361.56 billion), equivalent to US$11.12 billion, handily beating analyst expectations. Revenue climbed 42% in local currency terms to NT$839.25 billion, or $25.53 billion in U.S. dollars—though it declined 5.1% from the previous quarter.

Despite the geopolitical headwinds confronting the broader semiconductor sector, particularly amid U.S.-China tensions, TSMC has yet to register any material commercial fallout. Still, the company acknowledged that the threat of tariffs looms large, with CFO Wendell Huang citing “uncertainties and risks” tied to evolving trade policies—even as customer order patterns remain unchanged for now.

Looking ahead, management anticipates second-quarter revenue will land between $28.4 billion and $29.2 billion—guidance that skews above consensus.

The outlook is buoyed by persistent demand for TSMC’s most advanced 3nm and 5nm chips, as well as rising appetite for AI-centric hardware. Notably, the firm reaffirmed its forecast for full-year sales growth in the “mid-20%” range and projected revenue from AI-related silicon to double in 2025.

While President Trump temporarily carved out exemptions for tech products—such as semiconductors and smartphones—from his latest round of tariffs, that reprieve was short-lived. New licensing requirements for advanced AI chips, such as Nvidia’s H20 accelerators, were introduced shortly thereafter, sending shockwaves through the sector.

In a striking escalation, Trump recently warned that TSMC could face tariffs of up to 100% unless it accelerates its onshoring efforts. While the company has committed to $165 billion in U.S. investment and is building six fabrication plants in Arizona, the White House has yet to clarify whether such pledges would shield it from potential penalties on foreign-made chips.

Chairman C.C. Wei attempted to downplay the geopolitical noise, stating that the Arizona fabs will contribute approximately 30% of global capacity in cutting-edge 2nm and other high-end nodes once operational. He also rejected speculation of a tie-up with Intel, noting that TSMC is not engaged in any talks over joint operations or technology sharing.

Nvidia in the Crosshairs

NVIDIA announced a $5.5 billion charge in its first fiscal quarter, ending April 27, 2025, due to newly imposed U.S. export restrictions on its H20 AI chips to China.

The charge reflects unsellable inventory, unfulfilled orders, and purchase commitments tied to products that now require an export license—licenses that may not be granted. The U.S. government notified NVIDIA on April 9 that H20 shipments would require approval, a decision made indefinite on April 14.

The Chinese market, which generated $17 billion in revenue for NVIDIA in fiscal 2025, remains strategically vital. On April 17, CEO Jensen Huang traveled to Beijing to meet with senior officials and industry leaders, including Vice Premier He Lifeng, CCPIT Chairman Ren Hongbin, and DeepSeek founder Liang Wenfeng.

Huang, invited by the China Council for the Promotion of International Trade, underscored NVIDIA’s commitment to supplying China with optimized products that remain compliant with U.S. regulations, according to Chinese state media.

The visit signals Huang’s intent to preserve NVIDIA’s position in a market increasingly caught in the crossfire of escalating U.S.-China tech friction.