What the election could bring: Trump accuses Taiwan of stealing U.S. chip business.

• Trump, the former president, repeated his complaints about Taiwan, claiming it had stolen the US's semiconductor industry.
• On his podcast, Trump revealed that he planned to impose a tariff on Taiwan's semiconductor industry.
• Nvidia and every hyperscaler depend on Taiwan's chips to build AI models
• Citi says tariffs would increase costs across the entire technology supply chain

Over the weekend, former president Donald Trump expressed his irritation towards Taiwan on the Joe Rogan Experience podcast, claiming that the country had taken America's semiconductor industry.

If elected president, Trump would impose tariffs on chips from Taiwan, which would affect the global leader in chip building, whose clients include companies such as Intel and AMD.

Shares of Taiwan Semiconductor closed down 4.3% on Monday.

During his appearance, Trump stated that Taiwan had stolen their chip business and now sought protection. The podcast was released on Saturday evening.

TSMC is the primary manufacturer of advanced chips, with UBS analysts estimating that over 90 percent of the world's advanced chips are made by this Taiwanese company. Despite efforts by Intel and Samsung to compete, they have faced setbacks in their attempts to manufacture their own chips in-house.

As tensions rise between Taiwan and China, there is increasing pressure on U.S. businesses to develop an alternative to TSMC within the country.

Stacy Rasgon, a Bernstein analyst, stated that from a policy perspective, it is not important who builds the leading edge infrastructure in the U.S., as long as it is built here.

Taiwan stealing our chips industry is "ridiculous," said Rasgon.

The U.S. Commerce Department is set to provide nearly $7 billion to Taiwan Semiconductor Manufacturing Company (TSMC) to construct its Arizona foundry as part of the CHIPS Act. During its earnings call two weeks ago, TSMC CEO CC Wei stated that the company's Arizona plant was making progress, with volumes expected to ramp up in 2025.

TSMC and other major semiconductor firms have not yet received U.S. Commerce Department funds, but sources indicate that this allocation may occur by the end of the year if certain conditions are met.

Trump proposed that foreign companies should not be allowed to use government money in the U.S. and that the chip deal was a poor one. "That chip deal is so bad," he said. "We put up billions of dollars for rich companies to come in and borrow the money and build chip companies here. They're not going to give us the good companies anyway."

Citi analysts are discussing the potential impact of tariffs on the chip supply chain, stating that the process of auditing the costs would be complex and require examining thousands of devices that contain various chips.

The SMH ETF lost $675 billion in market cap in one week when Trump made similar comments about Taiwan, while TSMC fell over 10%.

Companies with fabs or those planning to build them, such as Intel, Global Foundries, and Texas Instruments, performed better than expected if Trump wins and favors domestic players.

A broader trade war could also challenge the tech sector, as seen with Micron under a Trump presidency, according to Patrick Moorhead, CEO of Moor Insights & Strategy and a top-ranked tech analyst.

If Vice President Kamala Harris wins the election, it's not an "all clear" for the semi trade. Experts warn that the harshest export controls on China implemented under the Biden administration have significantly impacted how much Nvidia and other semiconductors can sell into the country. Pre-export controls, Nvidia's business in China generated over 25 percent of total sales. Now, China accounts for less than 10% of Nvidia's revenue.