WSJ What’s News: The Uncertain Road Ahead for Chip Makers Release Date: April 17, 2025

In this episode of WSJ What’s News, hosted by Luke Vargas from The Wall Street Journal, the discussion centers on the semiconductor industry's current challenges and prospects, particularly focusing on Taiwan Semiconductor Manufacturing Co. (TSMC), US trade policies, and the broader economic implications of a weakening US dollar. Additionally, the episode delves into international trade negotiations, highlighting Italian Prime Minister Giorgia Meloni's upcoming visit to the White House.

1. TSMC's Stellar Earnings Amid Trade Turbulence

The episode opens with a significant highlight: TSMC, the world's largest contract chipmaker, has reported impressive earnings, surpassing analyst expectations with a 60% jump in profits. This performance stands out in a sector grappling with increasing export restrictions and the threat of looming US tariffs aimed at industry leaders like Nvidia and AMD.

Randy Abrams, Head of Taiwan Research at UBS, provides in-depth analysis:

“TSMC's main message is hey, our orders have not really changed. We still see good strength... We need to come back to us in three months as we get closer to the second half to see... do we have any sign of some moderation?” ([02:11])

2. Navigating US Tariffs and Export Restrictions

The semiconductor sector is under pressure due to US government actions targeting key players. Randy Abrams explains the broader implications:

“Trade negotiations between the two countries are underway in Washington... We’re going to put a tech tariff where US says hey, you have to reshore... which would have a bigger impact on the supply chain.” ([05:39])

Abrams highlights TSMC's strategic moves to mitigate potential tariff impacts, including increased investments in the US, particularly in Arizona, and collaborations with major packaging firms like ASE and Foxconn. These efforts aim to enhance the American supply chain and possibly negotiate tariff relief.

3. The Weakening US Dollar and Global Economic Strain

The episode shifts focus to the US dollar's recent depreciation against major currencies such as the euro, Japanese yen, and Swiss franc. Chelsea Delaney outlines the adverse effects on foreign exporters already burdened by US tariffs:

“A weaker US Dollar means that other currencies are getting stronger... This is essentially a double whammy... their goods have gotten even more expensive when selling into the US.” ([08:13])

Furthermore, Delaney discusses investor sentiment:

“Investors are questioning the attractiveness of US Assets... Foreign investors are pulling money out of the country...” ([08:52])

This erosion of confidence is compelling central banks worldwide to consider more aggressive interest rate cuts to stabilize their currencies.

4. Italian Prime Minister Giorgia Meloni's White House Visit

A significant geopolitical development covered in the episode is Italian Prime Minister Giorgia Meloni's scheduled visit to the White House. This marks the first meeting between a European leader and President Trump since the recent tariff imposition.

Margarita Stancati, the Rome-based correspondent, provides context:

“Meloni is likely going to make the case for the European Union's so-called 0 for 0 tariff deal... But Trump has made it very clear that that will not be enough for him.” ([11:15])

Meloni aims to strengthen her country's defense commitments, pledging to increase Italy's defense spending to 2% of its GDP—a key demand from Trump. However, the critical issue remains whether this gesture will translate into meaningful negotiations to alleviate tariffs and improve US-EU trade relations.

5. Additional Business and Political Updates

The episode briefly touches upon other noteworthy developments:

• Harvard's Tax-Exempt Status Under Threat: The Trump administration is moving to revoke Harvard University's tax-exempt status following the institution's refusal to comply with demands for admissions data and cessation of DEI (Diversity, Equity, and Inclusion) programs.

• US Efforts to End the War in Ukraine: Secretary of State Marco Rubio and White House envoy Steve Witkoff are in Paris engaging with European officials to discuss strategies for ending the conflict in Ukraine, amidst growing concerns over Russia's territorial ambitions.

Conclusion

WSJ What’s News provides a comprehensive overview of the semiconductor industry's current landscape, emphasizing TSMC's robust performance amidst potential US tariffs and global economic challenges exacerbated by a weakening dollar. The episode also underscores the delicate interplay between international trade policies and geopolitical maneuvers, particularly with Italy's proactive engagement with the Trump administration. As the situation unfolds, the semiconductor sector's trajectory remains uncertain, contingent on evolving trade dynamics and global economic stability.

Produced by Daniel Bach and Kate Bullivant. Supervising Producer: Sandra Kilhoff. Presented by The Wall Street Journal.