Login to Continue Learning
NVIDIA CEO Jensen Huang recently traveled to Taiwan to discuss tariffs and transfer pricing issues with TSMC. During a small media talk at the airport, Huang revealed that he was in Taiwan to discuss the upcoming Rubin AI chip for TSMC, as well as concerns from China about security backdoors in the H20 GPU and conversations with President Trump regarding the export license for the H20 AI GPU.
TSMC Facing Chip Problems Leading to Share Price Losses
Huang mentioned that he met with TSMC executives since their Vera Rubin AI GPUs are nearing the tapeout phase, which involves transferring a chip’s design to photomasks before early-stage production begins. NVIDIA’s shares have dropped by 3.7% over the past five days as investors rotate out of AI stocks.
According to Taiwan’s Economic Daily, Huang also discussed tariff impacts on TSMC products and transfer pricing issues with TSMC’s management. Transfer pricing is the price at which a company sells or buys goods within itself, often used to reduce tax burdens.
NVIDIA CEO’s Visit to Taiwan
Speculations suggest that the Trump administration might seek equity stakes in TSMC, though reports from The Wall Street Journal have denied this. Huang praised TSMC as the greatest company in the world during his airport talk and highlighted the importance of discussing production capacity allocation globally, minimizing tariffs for NVIDIA’s products, and addressing transfer pricing with TSMC’s management.
Transfer pricing involves setting prices for goods between different business units of a company to minimize taxes. For example, TSMC’s Arizona chip site is managed by its subsidiary TSMC Arizona, so discussions might involve the Arizona subsidiary selling chips to its parent company for NVIDIA to purchase or vice versa.
NVIDIA likely avoids significant tariffs due to its $500 billion US data center investment plan and procurement from TSMC’s Arizona plant. However, most of TSMC’s production capacity, including advanced nodes like 3-nanometer and 2-nanometer, is in Taiwan, making it unclear if NVIDIA or TSMC might be affected by the tariff war.
