Nvidia (NVDA), TSMC (TSM), and other chip stocks fell Thursday following President Trump’s announcement of sweeping reciprocal tariffs set to affect the semiconductor supply chain.
Nvidia stock dropped over 5%, while rival Advanced Micro Devices (AMD) declined by about 4%. Broadcom (AVGO) fell around 7%, and Micron (MU), which supplies memory chips for Nvidia’s graphics processing units (GPUs) also sank 7%.
TSMC, the Taiwanese contract chip manufacturer that makes the world’s most advanced semiconductors for Nvidia and Apple (AAPL), also sank about 5%.
Trump said Wednesday afternoon in a much-anticipated announcement that the administration is implementing reciprocal tariffs varying by country effective April 9. Until then, countries will be subject to a 10% worldwide base tariff effective April 5.
That means on April 9, the US will implement reciprocal tariff rates of 34% and 32% on imports from China and Taiwan, respectively. Because Trump has already enacted 20% tariffs on China in addition to existing import taxes, the total new tariff rate on China is 54%. There will also be a reciprocal tariff of 46% on Vietnamese imports, the White House said.
Still, Truist analyst William Stein wrote in a note late Thursday that Nvidia and other AI chip stocks are likely to see less impact than others "because their AI customers appear to be in a race to develop AI and specifically Artificial General Intelligence (AGI) at (perhaps) any cost."
China, Vietnam, and Taiwan are some of the largest exporters of servers to the US, including AI servers using Nvidia’s GPUs. US tariffs on imports from these countries would make purchasing servers using Nvidia’s GPUs more expensive, which could hamper demand for the AI chips.
"Taiwan, they took all of our computer chips and semiconductors," Trump said Wednesday. "We used to be the king, right? We were everything. We had all of it. Now we have almost none."
Taiwan's TSMC is the leading producer of the world’s most advanced computer chips for American companies such as Apple, AMD, Nvidia, and even its rival Intel (INTC). American chipmakers have outsourced production due to the costs of operating chip manufacturing plants, or “fabs.”
The US imported roughly $19 billion worth of “computers,” a category that includes servers equipped with Nvidia’s chips, from Taiwan in 2024 and $34 billion from China in 2024, according to trade data compiled by supply chain analyst and Michigan State University professor Jason Miller.
"As it turns out, most semiconductors enter the US inside other things (like PCs, servers, smartphones, cars etc)," Bernstein analyst Stacy Rasgon wrote in a note early Thursday.
Rasgon said that, in total, the US imported an estimated $200 billion in data processing machines such as servers, mostly from Mexico, Taiwan, China, and Vietnam. Mexico is already subject to a 25% tariff on roughly half of its exports to the US, with certain items exempt under the US-Mexico-Canada agreement (USMCA) signed by Trump during his first term.
"One (small) solace is that semiconductors have been (for now) exempted from reciprocal tariffs (though they will presumably be hit by the 10% baseline duties)," Rasgon wrote.
President Donald Trump holds a signed executive order during an event to announce new tariffs in the Rose Garden of the White House, Wednesday, April 2, 2025, in Washington. (AP Photo/Evan Vucci) ·ASSOCIATED PRESS
TSMC began the process of expanding production to the US under Biden with funding from the US Chips and Science Act — grants that Trump administration officials have suggested could come under further review.
" To any company that objects to our common sense, reciprocal tariffs … my answer is very simple," Trump said. "If they complain, if you want your tariff rate to be zero, then you build your product right here in America because there is no tariff if you build your plant, your product in America.”
But Truist's Stein said conversations with 10 manufacturers and distributors in the semiconductor supply chain suggested they aren't heading to the US to avoid tariffs, as Trump suggested.
"None of the respondents indicated any intention of building or adding capacity in the US to improve their situation," he wrote in his note. "One thoughtful respondent noted that no suppliers are adding capacity in non-tariffed geographies because they don't expect the tariffs will stick."
Laura Bratton is a reporter for Yahoo Finance. Follow her on Bluesky @laurabratton.bsky.social. Email her at laura.bratton@yahooinc.com.
