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Vanguard Warns Trump's Tariffs Could Lead to Inflation

In Taipei on February 25th, Taiwanese chip manufacturer Vanguard International Semiconductor cautioned that U.S. tariffs on imported chips could lead to inflation and impact global economic growth. However, the company anticipates only a minor direct impact on itself.

President Donald Trump recently announced plans for around 25% tariffs on semiconductors and pharmaceutical imports, adding to a series of threats to international trade.

Vanguard’s Chairman Leuh Fang indicated during an earnings call that they were taking a "wait and see" approach, as the extent of the U.S. administration's actions remained uncertain.

While acknowledging potential broad implications including inflation and weakened purchasing power, Fang noted the difficulty in predicting the specific effects on the global semiconductor industry.

Nonetheless, he reassured that the direct effect on Vanguard was expected to be insignificant due to their focus on legacy chips for cars and display panels, with a minimal portion of their products exported to the U.S. facing tariffs.

Contrary to other companies responding to Trump’s tariffs by establishing operations in the United States, Vanguard has no intention of doing so.

TSMC, a major chipmaker, has investments in Vanguard and is expanding its presence in the U.S., while some Taiwanese tech companies are also shifting production to the U.S. to counter tariff threats.

Despite facing challenges from Chinese competitors undercutting prices and pursuing aggressive expansion strategies, Vanguard remains confident. Fang highlighted the increasing trend of American customers transferring orders to Taiwan due to the overcapacity and price wars in China, coupled with escalating U.S.-China tensions.

Vanguard recently reported a 19.4% revenue increase to T$11.55 billion ($352 million) and a 48.7% surge in gross profit to T$3.314 billion for the quarter ending on December 31.

(This version corrects the revenue figure to T$11.55 billion ($352 million) from T$115.53 billion ($3.52 billion) in paragraph 14)