Tariffs are a huge concern in the stock markets right now. Depending on what the White House decides to announce, the markets could have a massive swing up or a huge drop. However, regardless of how tariffs are implemented, one thing is for sure: Supply chains are going to change.
President Donald Trump's focus on tariffs revealed that supply chains are vulnerable in some places and that some production needs to be brought back to the U.S. One key area is semiconductors, as these chips are critical in nearly every piece of technology we use. But just how much could this shake up supply chains? Quite a lot.
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Taiwan Semiconductor is starting to move production to the U.S.
Semiconductors are currently exempt from tariffs. However, Trump has stated he is investigating semiconductors as a potential tariff target. This is likely an effort to strong-arm foreign chip companies to increase chip production in the U.S.
However, many investors may be surprised to learn that the U.S. is actually a net exporter of semiconductors. According to research by The Motley Fool, the U.S. had an $11 billion trade surplus in semiconductors in 2024. However, one country with a significant trade deficit was Taiwan, which is clearly due to the presence of Taiwan Semiconductor Manufacturing (TSM -0.28%).
Taiwan Semi is the world's leading chip foundry and makes nearly all of the cutting-edge chips for various big tech companies like Apple and Nvidia. Still, TSMC is working to diversify its global footprint by building production facilities in Germany, Japan, and the U.S.
TSMC's initial $65 billion production facility in the U.S. has already sold out chip production capacity through 2027. To remedy this, TSMC announced an additional $100 billion investment that includes three manufacturing facilities, two packaging centers, and one research and development (R&D) facility. This will help boost the United States' domestic chip production, which Trump has repeatedly advocated for.
However, there are several key components to a chip manufacturing facility, and there's another company that investors need to watch for.
ASML is another key company to watch
A few companies support the chip industry with machines that nobody else makes, because there isn't a huge market for them. One of those companies is ASML (ASML -1.42%), which makes extreme ultra-violet (EUV) lithography machines. These machines lay the microscopic traces on a chip, which are now done with as little as 3 nanometers between each trace.
ASML is the only company in the world with this technology, so when you hear about Taiwan Semiconductor building new factories, you should immediately think about ASML.
Despite the industry's huge shakeup, with companies like TSMC expanding their global footprint, ASML's stock has been fairly weak, mainly due to some of its machines being banned from sale and servicing in China.
Still, they expect 2025 revenue to be in line with existing expectations and 2026 to be a growth year for the business as many new production facilities come online.
Despite positive news on the horizon for both businesses, each trades well below where they did at the start of 2025, when tariff fears weren't rampant.
TSM PE Ratio (Forward) data by YCharts
This makes today's prices fairly attractive, especially considering each company has growth in store and the boom of chip production in the U.S. I think both companies are excellent buys here. Still, investors need to stay patient and not be swayed by various headlines that will appear regarding tariffs.
