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Investing.com -- Bank of America analysts told investors in a note that the recent political signals suggest “companies with substantial U.S. manufacturing investments – such as TSMC — are likely to be exempt from the proposed Section 232 semiconductor tariffs.”
TSMC’s multi-phase Arizona projects, with a total investment of US$165 billion, make the probability of exemption high, BofA added, noting that this reduces near-term downside risk and may “enhance TSMC’s competitive position relative to peers with smaller or no U.S. footprint.”
The firm reiterated a Buy rating on TSMC with a price target of NT$1,400 (US$290).
BofA said that even in a scenario where tariffs are applied, the earnings impact would be modest.
“AI and HPC (the major growth driver) are expected to remain resilient due to low price elasticity and strategic procurement by hyperscalers,” the bank stated.
Consumer electronics, which account for “about 40-50% of revenue, are more price sensitive,” meaning U.S. volumes could decline modestly if costs are passed through.
BofA estimated a potential “0.8-4.0% earnings impact,” but noted that valuations remain attractive at “18x 2026E PE,” with strong AI demand likely offsetting any shortfall.
The analysts also highlighted potential risks across the broader Taiwan semiconductor supply chain, including OSAT and other ecosystem partners, which “could still face tariff exposure.”
Some companies are pursuing U.S. diversification, though this carries “execution risk and potential margin headwinds,” according to the bank.
Investors are advised to focus on the confirmation of TSMC’s exemption in mid-August and the detailed criteria, including “timeline, investment amount, and scope,” which will clarify the impact of Section 232 tariffs on the company and the wider semiconductor ecosystem.