Hello everyone from Taipei! This is Cheng Ting-Fang, TechAsia host of the week.
It was a two-week roller coaster for many supply chain executives and managers. The two largest economies in the world slap tariffs of more than 125% on each other, and the US threatens the “mutual” tariffs of most trading partners, further tightening AI chip export controls.
Our leading Asian suppliers offer everything from components to final assembly from Apple, Samsung, HP, Dell, Amazon and Meta. We call almost 24/7 to deal with fallout. With these suppliers’ close contacts, it feels like you’re sitting in the back seat watching this real life drama unfold.
“You may need to look at a psychiatrist for your mental health,” the component supplier manager told me. “Before I went to sleep, the customer said they needed to hold all US cargo the next day, but when I opened my eyes, an emergency notification said they wanted the manufacturing to come back at full speed and move all orders into the third quarter and take advantage of the 90-day mutual tariff suspension.”
This is just an example of the type of message I’ve been receiving recently. The relentless pace of these policy changes is punishing, even more uncertainty and pressure.
Fang Leuh, chairman of TSMC’s affiliate chip maker Vanguard International Semiconductor, was very open about the challenges. He said his company had been focusing on “mild growth” in 2025 before Trump’s tariffs, but now it needs to “revisit” the outlook. When asked about potential growth drivers this year, the chairman said, “I have nothing to write about in the house.”
Yesterday evening I called with another longtime industry friend whose company serves major PC manufacturers. He told me there were some new issues. Even some products made in China still need materials from American suppliers such as 3M and DuPont. Such components have become 125% more expensive overnight due to Chinese retaliatory tariffs. To get more intrusive about the issue, some tech brands suggest that they could ask their suppliers to cut prices in the second half of 2025 as their supply chains are digging into profits.
For over 20 years, consumers around the world have taken it for granted that finest technological products such as iPhones and MacBooks arrive at time and reasonable prices thanks to the large, efficient supply chain of electronic equipment that works 24 hours a day. This golden age may already be coming to an end.
I remember when I was little I loved a children’s book called Monty. In the story, a crocodile named Monty Ferries heads to school every day, crossing the river, with rabbits, frogs and ducks. The trio relies on Monty, but they’ve always criticised him for his swimming and speed. Then one morning, Monty was gone – the crocodile is on vacation. The three friends try every way they can imagine crossing the river themselves, but fail, and eventually realize how important Monty is.
By undermining the ultra-efficient global supply chain, the US is now facing its own “montimum.” The ripple effects of this decision are felt by the whole world.
TSMC’s new technology will become a form
In a ever-changing geopolitical situation, tech companies must continue to innovate to survive. Nikkei Asia’s Cheng Ting-Fang reports that TSMC is completing the first design of its next-generation chip packaging technology. This involves fundamental changes in board shape to help major AI chip developers, such as NVIDIA, Amazon and Google’s boost computing performance.
The chip maker is targeting small-volume production of so-called panel-level packages in 2027, with the first pilot development line in Taiwan’s urban cities. Sources told Nikkei Asia that the first generation of this packaging method will use a 310 mm by-310 mm square substrate, the material on which the chip is built.
If successful, TSMC’s transition to a radically different chip packaging approach will have a major impact on the products and R&D roadmap of many equipment manufacturers. Chip tool makers in the US, Japan and Taiwan have already begun redesigning their machines to accommodate new form factors. This square substrate can integrate more AI superchips than traditional round wafers, allowing for even more powerful AI computing.
Optical advances
Apple Supplier TDK is advocating a major breakthrough in technology to speed up data processing and solve important bottlenecks for the expansion of generative artificial intelligence, writes Harry Dempsey of The Financial Times in Tokyo.
The Japanese group, famous for its cassette tapes with logos displayed in London’s Piccadilly Circus ads, believes that the world’s first spin photo detector (a fusion of optical, electronic and magnetic elements) will become a gamechanger to increase data transmission and reduce data centre power consumption.
A demonstration held at Nihon University showed response times of 20 picoseconds, or 20 trillion seconds.
The road to commercialization is set to take up to five years and requires cooperation from integrated circuit designers, but TDK’s new technology highlights that data transfer between processing units has become one of the key issues in the development of generated AI.
Other industry leaders, including TSMC, the world’s largest chip maker, are throwing resources to solve problems through next-generation silicon photonics, which use optical technology to overcome current constraints in electronic devices.
Live at that moment
The stocks of China’s leading and Taiwanese technology suppliers have been assaulted in days and weeks after Trump unlocked his “mutual” tariffs and provided a measure of supply chain disruption that the policy is expected to bring.
Some executives even say it goes beyond the uncertainty seen during the Covid-19 pandemic, writing by Nikkei Asia’s Lauly Li and Cheng Ting-Fang. One supplier’s manager said he lives as if there is no tomorrow as there is very little visibility into future demand.
With a 90-day suspension at most “mutual” tariffs and a temporary exemption from smartphones and laptops, brands like HP, Dell and Meta are urging their suppliers to drive production in the US market. Meanwhile, Apple has been asking suppliers to build more products since the beginning of this year due to tariff uncertainty, and is auditing suppliers’ non-China production facilities. The company also asked its suppliers to prepare to assemble more than 90% of its new iPhone. It is expected to be released in India later this year for the US market.
However, the game consoles were not as lucky enough to be eligible for US tariff exemptions. This means that units shipped from China can face a high price of 145%. This is a major challenge for Nintendo’s highly anticipated Switch 2, as Li and Cheng report, as the majority of current production is currently taking place in China.
Together
Two heads are better than one. This idea is written by Nikkei Asia’s Ryohtaroh Satoh, who has gathered Japanese automakers, including Toyota, Nissan and Honda, to develop standardized designs for the next generation of automotive chips by March 2029.
The initiative is at the forefront of the Automotive Software Platforms and Architecture (Asura) Consortium, aiming to solidify Japanese automotive leadership and increase competitiveness against Chinese rivals like BYD.
It also comes with major chip and component suppliers such as Denso and Renesas Electronics. By standardizing automotive chips, these companies want to gain stronger negotiation power and higher output with major contracted chip manufacturers like TSMC.
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#Techasia is coded at Katherine Creel, Nikkei Asia in Tokyo, with support from FT Tech Desk in London.
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