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Pegatron chair confident Taiwan tech sector can weather 20% US tariffs

Chloe Liao, Taipei; Jingyue Hsiao, DIGITIMES Asia 0

The US has imposed a 20% tariff on imports from Taiwan, though Taiwanese President William Lai has said the rate is temporary as talks continue. Pegatron chairman T.H. Tung remains confident in the Taiwanese electronics industry's ability to handle these challenges.

Taiwan's tech resilience shines despite trade pressures

Tung, attending the "AI WAVE SHOW" as honorary chairman of the Taipei Computer Association, commented on Taiwan's standing in the changing trade environment. He expressed confidence in the resilience of Taiwan's high-tech industry, highlighting strong export performance during the first half of 2025. Tung said Taiwan's trade surplus with the US during this period has already surpassed the total for 2024, reflecting robust demand for high-tech products critical to US AI and cloud infrastructure development. He described Taiwan as a key global technology partner rather than a market invader, emphasizing that the industry's competitive advantages stem from process capabilities and responsiveness rather than tariff rates.

Traditional sectors face greater tariff vulnerability

Despite this optimism, Tung voiced greater concern for traditional industries and agriculture, sectors more vulnerable to tariff impacts, and called on the government to devise support strategies. Taiwan's negotiation outcome proves especially significant given Japan and South Korea's recent agreements, which have secured a 15% tariff rate, raising questions about Taiwan's ability to match these terms. Industry analysts have speculated that higher tariffs could disadvantage Taiwan's semiconductor exports, which closely compete with those of South Korea.

Scale matters in US investment negotiations

Tung noted that although per capita GDP is roughly similar among Taiwan, Japan, and South Korea, the larger population and broader economic scale of Japan and South Korea provide them with leverage in negotiating substantial US investments. Japan has committed US$550 billion and South Korea US$350 billion in American projects, at levels comparable to Taiwan's previous commitments, including those from Taiwan Semiconductor Manufacturing Co. (TSMC).

Technology leadership trumps tariff advantages

However, Tung emphasized that TSMC's technological leadership owes more to its core strengths in manufacturing excellence than to tariff conditions. He pointed to Intel, a US company not subject to tariffs, as an example that tariff-free status alone does not guarantee competitive superiority in foundry services. Therefore, fears that tariffs could impede Taiwan's semiconductor sector are, according to Tung, overstated.

Client preferences-driven manufacturing decisions

Regarding broader US trade policy, Tung referenced the 25% tariff previously imposed by the Trump administration on India, which exceeded industry expectations. He acknowledged uncertainties in how evolving tariffs might affect Pegatron's manufacturing presence in India, especially since Pegatron serves global markets beyond the US. He stressed that factory placements are often driven by the preferences of brand clients rather than unilateral decisions by Taiwanese manufacturers. Since manufacturing profit margins account for less than 25% of sales prices, tariff burdens are unlikely to be absorbed significantly by Taiwanese firms.

Tung concluded by noting that US tariff conflicts can ultimately harm domestic interests, as the impact on consumers and broader trade dynamics remains uncertain. Taiwan's position in upcoming negotiations will prove critical in shaping the country's role in the global semiconductor race under shifting international trade conditions.

Article edited by Jerry Chen