Taiwan’s TSMC said on Tuesday that U.S. tariffs have had some impact on the company, and discussions with Washington about this are ongoing. However, demand for artificial intelligence (AI) remains very strong and continues to exceed supply. U.S. President Donald Trump’s trade policies have created uncertainty in the global semiconductor industry, including for TSMC, the world’s leading producer of advanced chips with major customers such as Apple and Nvidia.

At TSMC’s annual shareholders meeting in Hsinchu, CEO C.C. Wei noted that customer behavior has not changed despite tariff-related uncertainties. He added that the situation might become clearer in the coming months. “Tariffs do impact TSMC, but indirectly, since tariffs apply to importers, and TSMC is an exporter. Still, tariffs can raise prices, which may reduce demand,” Wei explained. “If demand falls, it could affect our business. But I can confirm that AI demand remains very strong and continues to outpace supply.”

Earlier in April, TSMC expressed optimism about the year ahead, driven by strong AI-related demand. Wei mentioned ongoing talks with the U.S. Department of Commerce regarding tariffs, highlighting concerns that tariffs could raise production costs in the U.S., where TSMC is investing $165 billion in new factories. Some equipment sourced from U.S. suppliers is manufactured in Asia, complicating matters.

“The Commerce Department said the issue is open for discussion, but how long that will take is uncertain,” Wei said. “Active communication is key so they understand the consequences.” Wei also shared that when he informed President Trump about the $100 billion investment announced together in March, he was told, “Do your best, that’s good enough.” Regarding rumors of TSMC planning factories in the United Arab Emirates, Wei denied any such plans, citing a lack of customers in the region.

Domestically, TSMC’s profit margins are being squeezed by the recent rise of the Taiwan dollar, which Wei said has cut gross margins by over 3 percentage points. TSMC also faces broader geopolitical risks as China increases military pressure on Taiwan, which it claims as its own territory. “If an unwanted event occurs, it is a matter for governments to handle, not just TSMC,” Wei said when asked about potential crises in the Taiwan Strait.