# US-Taiwan Trade Deal, TSMC's Wendell Huang on Q4 Earnings

An episode of [Bloomberg Daybreak: Asia Edition](https://invisiblenetwork.ai/podcast/1663863437), 16 Jan 2026, 17 min.

Audio: https://podtrac.com/pts/redirect.mp3/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/58e85be7-dbb5-4043-afed-af80014dc0b3/cfe3091b-0331-4987-bf16-b3d4001a0ba4/audio.mp3?utm_source=Podcast&in_playlist=27143354-63aa-4ac5-965d-af80014dc0d3

The US and Taiwan agreed to a trade pact that would lower tariffs on goods from Taiwan to 15% and see Taiwanese semiconductor companies increase financing for American operations by $500 billion. Taiwan Semiconductor Manufacturing Co. shares climb as much as 2.7% in Taipei after the chipmaker’s strong results and outlook underscored the strength of demand trends related to AI. The shares ended 4.4% higher overnight in the US. Rob Haworth, Senior Investment Strategy Director at U.S. Bank Asset Management Group, talks TSMC, the day's eco data, and what's next for the Fed. After reporting huge profits in Q4, Wendell Huang, the CFO of Taiwan Semiconductor Manufacturing Co. affirmed the company’s strong conviction in the “mega trend of AI demand.” Huang mentions that the company is eyeing smaller tech gap between US and Taiwan chipmaking fabrication plants. While addressing the challenges, Huang says that the key to managing forex exposure is to keep it simple. See omnystudio.com/listener for privacy information.

## Transcript

[0:02] Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
[0:10] Speaker 2: Welcome to the Daybreak Asia podcast. I'm Doug Risner. So
[0:13] Speaker 2: the US and Taiwan have a trade deal. It lowers
[0:16] Speaker 2: tariffs to fifteen percent from the previous twenty percent, and
[0:20] Speaker 2: that means that US tariffs on goods from Taiwan are
[0:23] Speaker 2: now on par with those for Japan and South Korea.
[0:26] Speaker 2: As a part of the trade deal with Taiwan, semiconductor
[0:29] Speaker 2: companies will be making at least direct investments of around
[0:33] Speaker 2: two hundred and fifty billion dollars toward American energy and
[0:36] Speaker 2: artificial intelligence operations. Here is Bloomberg's Michael Sheppard.
[0:41] Speaker 1: It's been a top priority for officials there in Taipei,
[0:43] Speaker 1: but also here in Washington, because Taiwan is such a
[0:47] Speaker 1: crucial source of the chips that go into artificial intelligence
[0:51] Speaker 1: and AI data centers across the US and around the world,
[0:55] Speaker 1: and they wanted to make sure they get this locked
[0:58] Speaker 1: into place and that they can in you know, have
[1:01] Speaker 1: some assurance that supply lines to the island are really
[1:07] Speaker 1: in a good place.
[1:08] Speaker 2: That is Bloomberg's Michael Sheppard. Now this trade deal comes
[1:11] Speaker 2: as TSMC, the world's top maker of those AI Chips
[1:15] Speaker 2: released earnings, and at the same time, Taiwan Semi earmarked
[1:19] Speaker 2: a hefty increase in capex spending for twenty twenty six.
[1:23] Speaker 2: Here is Bloomberg analyst Matthew Bloxham.
[1:25] Speaker 3: Talking about fifty two to fifty six billion dollars of
[1:29] Speaker 3: capital spending in this coming year. That's about six to
[1:34] Speaker 3: ten billion dollars or fifteen to twenty percent higher than
[1:37] Speaker 3: the market was expecting. A big step up year on year,
[1:41] Speaker 3: over ten billion up Here on year, that.
[1:43] Speaker 2: Is Matthew Bloxham from Bloomberg Intelligence. By the way, US
[1:46] Speaker 2: listed shares in TSMC picked up nearly four and a
[1:50] Speaker 2: half percent. In the overall equity market today, we had
[1:53] Speaker 2: small caps continuing to outperform. The Russell two thousand gained
[1:58] Speaker 2: more than eight tens of one percent and beat the
[2:00] Speaker 2: S and P five hundred for a tenth straight session.
[2:03] Speaker 2: The S and P was up just two tents of
[2:05] Speaker 2: one percent today. For a look at market action, I'm
[2:08] Speaker 2: joined by Rob Hayworth. The is senior investment strategy director
[2:12] Speaker 2: at US Bank Asset Management Group. Rob is on the
[2:14] Speaker 2: line from Seattle. Thank you for being here. I'd like
[2:18] Speaker 2: to begin by getting your take on this rotation that
[2:21] Speaker 2: we've been seeing into small cap stocks.
[2:24] Speaker 4: Yeah, we really saw this even as we finished out
[2:26] Speaker 4: twenty twenty five. Over the last month month and a
[2:29] Speaker 4: half was we were starting to see the market look
[2:31] Speaker 4: towards rotation. And I think that's one the impact of
[2:35] Speaker 4: lower FED interest rate costs, right the Fed having already
[2:38] Speaker 4: lower rates by three quarters a point is giving some
[2:41] Speaker 4: room for small caps to run. And then two, we're
[2:44] Speaker 4: seeing the beneficiaries of artificial intelligence really start to broaden out,
[2:47] Speaker 4: first with healthcare that's helping this rotation strategy. And then three,
[2:51] Speaker 4: earnings expectations are picking up across the spectrum, both large
[2:54] Speaker 4: and small. And part of that is probably the look
[2:56] Speaker 4: ahead to tax season when consumers will start to benefit
[3:01] Speaker 4: from some of the tax cuts that are part of
[3:03] Speaker 4: the One Big, Beautiful Bill Act. So that's really starting
[3:06] Speaker 4: to drive I think a broader economic cycle here than
[3:10] Speaker 4: what we saw over the last six months of the year,
[3:12] Speaker 4: which was mostly artificial intelligence driven.
[3:16] Speaker 2: So today's economic news, I think, by and large was
[3:19] Speaker 2: above expectations. Jobless claims unexpectedly down to the lowest level
[3:23] Speaker 2: since November, and then we had the manufacturing survey for
[3:27] Speaker 2: the New York Area activity expanded, and at the same time,
[3:31] Speaker 2: a gauge of prices dropped to a near one year low.
[3:36] Speaker 2: When you hear points like that, does it create a
[3:38] Speaker 2: little bit of uncertainty in terms of what the FED
[3:41] Speaker 2: may be doing this year?
[3:42] Speaker 4: Well, I think it certainly gives the FED room to
[3:45] Speaker 4: evaluate data as we press ahead. We know some Committee
[3:48] Speaker 4: members are very convicted that we need to have much
[3:51] Speaker 4: lower interest rates right now, but we've heard from other
[3:53] Speaker 4: speakers where they're taking a little more of a wait
[3:55] Speaker 4: and see attitude. And I think as long as the
[3:58] Speaker 4: economy is holding together and we've got a lot of
[4:00] Speaker 4: stimulus in this pipeline between one big beautiful Bill Act,
[4:04] Speaker 4: the World Cup is going to push up spending here
[4:06] Speaker 4: in the US. The two hundred and fiftieth anniversary celebration
[4:10] Speaker 4: is going to help spending here in the US. So
[4:12] Speaker 4: there's some stimulus coming through here that I think can
[4:15] Speaker 4: continue to drive the story and maybe give the FED
[4:19] Speaker 4: time to evaluate the incoming data, because certainly the jobs
[4:23] Speaker 4: data has been pretty solid. The inflation data is slowing,
[4:26] Speaker 4: but not quickly, and so the FED, having done three
[4:30] Speaker 4: quarters a point of cuts to finish the year, maybe
[4:32] Speaker 4: can take some time to evaluate the market, and our
[4:35] Speaker 4: base case is still we probably get two or three
[4:37] Speaker 4: cuts this year, but they don't have to happen right away.
[4:40] Speaker 2: I'm curious to get your take on what's been going
[4:42] Speaker 2: on in the bond market with this very low volatility
[4:45] Speaker 2: that we've been seeing. I think the ten year treasury
[4:48] Speaker 2: the yield right now is headed for a fifth straight
[4:51] Speaker 2: week of minimal change. And if you talk to folks
[4:55] Speaker 2: on the street, they seem to be a little anxious
[4:56] Speaker 2: here because in previous cases like this, where you've had
[5:00] Speaker 2: a constricted range of yield, it's been followed by selloffs.
[5:04] Speaker 2: How do you make sense of the low volatility in
[5:07] Speaker 2: the bond market.
[5:08] Speaker 4: Well, I think we just don't have enough data yet
[5:10] Speaker 4: to tell us the direction here. Right There's been concern
[5:13] Speaker 4: that we have elevated inflation, or perhaps we get rising
[5:17] Speaker 4: deficits that could really push rates higher. On the other hand,
[5:20] Speaker 4: if we were really getting a weaker labor market right,
[5:24] Speaker 4: that could easily push long term rates lower because of
[5:27] Speaker 4: a growth scare. For now, I think we're just we're
[5:30] Speaker 4: stuck waiting for that data to come in. We're still
[5:33] Speaker 4: not all caught up on data from the government shutdown
[5:36] Speaker 4: we don't yet have PPI through year end. We're not
[5:40] Speaker 4: going to get PCE through year end. We don't have
[5:43] Speaker 4: personal income data. We're not going to get fourth quarter
[5:47] Speaker 4: GDP growth by the end of the month. We're still
[5:49] Speaker 4: finishing up Q three data. So I think there's a
[5:51] Speaker 4: lot of data that bond investors would really like to
[5:54] Speaker 4: see to understand what where they should probably price fixed
[5:59] Speaker 4: income at this moment, and so I think we're really
[6:01] Speaker 4: waiting for that. Then there's the additional factor with the
[6:05] Speaker 4: President directing a Fanning and Freddy to start purchasing more
[6:09] Speaker 4: mortgage bonds. That's going to hold interest rates in there
[6:12] Speaker 4: as well. Right, You've got more liquidity being absorbed in
[6:15] Speaker 4: the market, So for those who were planning to buy
[6:17] Speaker 4: mortgage bonds, they may have to be buying longer term
[6:20] Speaker 4: treasuries at this point, which is also helping keep that
[6:23] Speaker 4: volatility low.
[6:24] Speaker 2: We've seen a lot of influence from geopolitics, particularly in
[6:28] Speaker 2: the crude oil market. President Trump yesterday signaling he may
[6:32] Speaker 2: hold off on attacking Iran for now. Interesting piece in
[6:36] Speaker 2: the Wall Street Journal indicating that Trump was told an
[6:39] Speaker 2: attack would not guarantee the collapse of the Iranian regime.
[6:42] Speaker 2: In fact, it may even sparkle wider conflict. So today
[6:46] Speaker 2: WTI broke down below sixty dollars a barrel. I think
[6:49] Speaker 2: we were off about four and a half percent in
[6:51] Speaker 2: New York trading. That's obviously a positive when you look
[6:54] Speaker 2: at the inflation story. But how are you evaluating the
[6:58] Speaker 2: impact of geopolitics on overall trading right now, particularly in
[7:02] Speaker 2: the commodity space.
[7:03] Speaker 4: Well, it's certainly been fairly muted. But I think that's
[7:06] Speaker 4: the muted aspect, whether it's in oil or equities. Really,
[7:10] Speaker 4: I think in our view reflects that we haven't seen
[7:13] Speaker 4: a lot of ongoing engagement in areas outside of Russia Ukraine,
[7:18] Speaker 4: which kind of continues, and the markets become somewhat numb
[7:21] Speaker 4: to at this point as long as we're not getting
[7:23] Speaker 4: boots on the ground, right we had no boots on
[7:26] Speaker 4: the ground stay in Venezuela. We didn't get an attack
[7:29] Speaker 4: and Iran. I think the market can adapt to that. Additionally,
[7:32] Speaker 4: when I start to think about the oil market, the
[7:35] Speaker 4: issue there is you have a very well supplied market
[7:37] Speaker 4: at this point, and unless we start taking more OPEC
[7:40] Speaker 4: barrels off, which OPEC's plan is to add barrels. It
[7:44] Speaker 4: seems like prices can stay in this relatively low zone
[7:49] Speaker 4: for some time as long as we're not changing that
[7:51] Speaker 4: supply equation.
[7:53] Speaker 2: It's been very interesting trading for the last couple of
[7:56] Speaker 2: days in the precious metals market. There was a four
[7:58] Speaker 2: day rally in seal that saw the price increase something
[8:02] Speaker 2: greater than twenty percent, but we had to pullback late
[8:05] Speaker 2: in the day Wednesday, US during the Asian session. Right now,
[8:10] Speaker 2: I'm looking at the spot price down roughly one and
[8:13] Speaker 2: a half percented around ninety dollars announced for silver. Talk
[8:17] Speaker 2: to me about what you believe to be the influences
[8:20] Speaker 2: on the precious metals market.
[8:22] Speaker 4: Well, I think we've seen a couple of things on
[8:24] Speaker 4: precious metals last year, Especially early in the year, it
[8:27] Speaker 4: seemed like global central bank buying was part was really
[8:30] Speaker 4: the key driver, and then speculators have taken over as
[8:34] Speaker 4: we've seen higher ETF flows in both gold and silver
[8:38] Speaker 4: and more demand across the market. We don't yet here
[8:41] Speaker 4: in New York have an update on the CFTC data.
[8:45] Speaker 4: We're still probably a week away from getting current on
[8:48] Speaker 4: what's going on in the futures market and how extended
[8:52] Speaker 4: speculators could be there, but in general we've seen rising
[8:56] Speaker 4: speculative demand as silver is caught up in terms of
[8:59] Speaker 4: its history oracle relationship to gold. And then you have
[9:03] Speaker 4: I think investors trying to anticipate where central banks may go,
[9:06] Speaker 4: given that we continue to see kind of geopolitical uncertainty
[9:10] Speaker 4: and risk, and so I think that's been a key
[9:12] Speaker 4: driver for prices and maybe has gotten them to a
[9:15] Speaker 4: bit of an excess speculative point at the moment. That
[9:18] Speaker 4: doesn't mean in our in our estimation that we won't
[9:22] Speaker 4: get further gains as we look through the ear but
[9:24] Speaker 4: it does seem like we're getting to a point where
[9:26] Speaker 4: the market probably needs to consolidate, given how stretched that
[9:30] Speaker 4: price action is in both gold and soul.
[9:32] Speaker 2: I want to get your take on the AI trade
[9:34] Speaker 2: vis A VI Taiwan semic Inductor. We learned today that
[9:37] Speaker 2: the company has earmarked as much as fifty six billion
[9:41] Speaker 2: dollars in capex for twenty twenty six. That seems to
[9:45] Speaker 2: suggest that company's got a lot of confidence in the
[9:47] Speaker 2: longevity of this AI boom. Do you share that enthusiasm.
[9:51] Speaker 4: We are very enthusiastic here, and I think in particular
[9:54] Speaker 4: the reason we point to that is not not because
[9:57] Speaker 4: of the investment cycle, but rather the use cycle. We're
[9:59] Speaker 4: starting to see those use cases get built out. Healthcare
[10:02] Speaker 4: has been the primary beneficiary we see that's starting to
[10:06] Speaker 4: really use AI and bring that into its system. But
[10:09] Speaker 4: that's a lot of what we hope to see as
[10:11] Speaker 4: we move through earning season, fourth quarter, and especially first
[10:14] Speaker 4: quarter this year is more of the profit and use
[10:17] Speaker 4: cases being built out and explained by companies for artificial intelligence.
[10:21] Speaker 4: So the investment cycle needs to continue, but the use
[10:24] Speaker 4: cases are starting to show up, and that tells us
[10:27] Speaker 4: that there's still legs to this rally as companies start
[10:30] Speaker 4: to really bring artificial intelligence into their businesses and create
[10:34] Speaker 4: efficiencies and create profits.
[10:36] Speaker 2: Are you seeing opportunity these days outside the US and
[10:40] Speaker 2: any offshore market?
[10:42] Speaker 4: Actually, yes, we do think global markets interestingly broadly have
[10:47] Speaker 4: significant opportunities. And interestingly, if we look at performance, if
[10:51] Speaker 4: we think about twenty twenty four, we saw very strong
[10:55] Speaker 4: performance for developed markets, for emerging markets, and US dollar weakness.
[11:00] Speaker 4: This year, they're actually leading the US again to start
[11:03] Speaker 4: the year, and yet we're seeing US dollar strength and
[11:06] Speaker 4: what we think is driving that is a couple of
[11:08] Speaker 4: things One, you're seeing higher earnings expectations, and part of
[11:11] Speaker 4: that is many foreign economies Japan would be the exception.
[11:16] Speaker 4: We're early in their rate cuts and that really is
[11:18] Speaker 4: helping to support their economies and to support their earning cycle.
[11:22] Speaker 4: And Two, we've seen the global economy really rebalance around
[11:25] Speaker 4: trade and that's starting to benefit companies outside the US
[11:28] Speaker 4: as well. So it looks like we're getting kind of
[11:31] Speaker 4: an earnings resurgence outside the US. And while we're not
[11:37] Speaker 4: kind of bearish on the US, we're bullish on the
[11:39] Speaker 4: global story. We think there's much more room for a
[11:41] Speaker 4: global story in investors' portfolios in the year ahead, much
[11:45] Speaker 4: like we saw in twenty twenty five.
[11:47] Speaker 2: All right, Rob, we'll leave it there, Thank you so
[11:49] Speaker 2: very much. Rob Hayworth is Senior Investment Strategy director at
[11:53] Speaker 2: US Bank Asset Management Group. Joining from Seattle here on
[11:56] Speaker 2: the Daybreak Asia podcast. Welcome back to the Daybreak Asia Podcast.
[12:07] Speaker 2: I'm dek Krisner. Let's take a closer look now at TSMC.
[12:10] Speaker 2: The company reported strong results and an ambitious spending plan
[12:15] Speaker 2: that reverberated across equity markets in both Europe and the US.
[12:19] Speaker 2: We caught up with TSMC's chief financial officer, Wendel Huang.
[12:23] Speaker 2: He spoke with Bloomberg's Annabel Droolers in Taipei, and the
[12:27] Speaker 2: conversation started with a question about TSMC's spending plans in
[12:31] Speaker 2: the US.
[12:32] Speaker 5: It really depends on customer demand. In the US. A
[12:36] Speaker 5: lot of customer wants to go there, so we will
[12:40] Speaker 5: expand over there. But for the leading edge technologies, it
[12:44] Speaker 5: will be in Taiwan because it's a heavy cooperation between
[12:51] Speaker 5: the R and D people and operation people for practical reasons.
[12:57] Speaker 6: And leading edge will continue to be led by thai One.
[13:00] Speaker 6: You think over the US market and that no changes
[13:03] Speaker 6: to that at all, even with you adding a lot
[13:05] Speaker 6: more capacity in the States.
[13:06] Speaker 5: Yeah, that's for practical reasons.
[13:09] Speaker 6: Is it possible though, to speed up how quickly that
[13:11] Speaker 6: advanced tech can be shifted from Taiwan to the States.
[13:16] Speaker 5: Yeah, we can try to do that to shorten the gap.
[13:19] Speaker 6: What does that transfer gap look like then? If right
[13:21] Speaker 6: now it's several years Taiwan is ahead, what does that
[13:25] Speaker 6: actually look like in the future.
[13:26] Speaker 5: We don't have a specific timeline now, but we do
[13:30] Speaker 5: we can try to accelerate that. We think we can
[13:33] Speaker 5: try to accelerate.
[13:34] Speaker 6: Could it be shortened to months? Do you think it
[13:37] Speaker 6: will be difficult challenging? Okay, so it stays at least
[13:41] Speaker 6: one one year behind then Capex it's fifty two to
[13:46] Speaker 6: fifty six billion dollars, Yeah, for this year. So can
[13:50] Speaker 6: you tell us exactly how much of that is going
[13:52] Speaker 6: to the US, Given you've got such a big focus
[13:54] Speaker 6: on the capacity built out there.
[13:56] Speaker 5: We don't just break down those numbers. Do tell people
[14:01] Speaker 5: that in the next three years the total KPEX is
[14:04] Speaker 5: going to be significantly higher than the number in the
[14:08] Speaker 5: past three years. So that is the evidence of our
[14:11] Speaker 5: strong conviction in the AI megatren.
[14:15] Speaker 6: Our sources are saying, for instance, at least four additional
[14:19] Speaker 6: fabs could be added in the US in addition to
[14:22] Speaker 6: what's already been pledged.
[14:24] Speaker 7: Is that realistic?
[14:26] Speaker 5: It depends on customers demand. We are looking at very
[14:30] Speaker 5: strong customer demand.
[14:31] Speaker 7: Could you give us the number?
[14:32] Speaker 5: We don't have the number.
[14:34] Speaker 7: Do you want to ask about Intel as well?
[14:36] Speaker 6: I'm wondering whether you see any potential for collaboration with
[14:39] Speaker 6: the business, given they've got very strong expertise in advanced
[14:42] Speaker 6: packaging technology in particular, could that be an area for
[14:46] Speaker 6: you to work on giving you already outsourcing this to
[14:48] Speaker 6: third parties with your constraints.
[14:51] Speaker 5: It depends if it makes sense to the customers and
[14:54] Speaker 5: also if it makes sense to our wafer business. The
[14:58] Speaker 5: advanced packaging business to us is a strategic It enable
[15:03] Speaker 5: our wafer business. So if we are there are more
[15:08] Speaker 5: alternatives in the market which can enable our business, we
[15:12] Speaker 5: can consider that.
[15:13] Speaker 6: Would you weigh up investing in Intel, just like some
[15:17] Speaker 6: of your biggest customers have done.
[15:19] Speaker 5: No discussion at all. All I'm trying to say is
[15:23] Speaker 5: it can be.
[15:24] Speaker 7: Considered Taiwanese dollar.
[15:26] Speaker 6: In our survey of different FX strategists and analysts at Bloomberg,
[15:32] Speaker 6: they're actually saying it's going to end the year at
[15:34] Speaker 6: thirty point nine. So what is the impact to you
[15:38] Speaker 6: if you see that further sort of strengthening and what
[15:40] Speaker 6: sort of headwind does it represent?
[15:42] Speaker 5: For exchange rate between US dollar and t does affect
[15:45] Speaker 5: our profitability? In the past, for every percentage change in
[15:52] Speaker 5: for exchange way, it will affect our margins gross margins,
[15:57] Speaker 5: operating margin by forty point. Nowadays, when the margins are higher,
[16:04] Speaker 5: the impact become less sensitive. So nowadays it's about thirty
[16:10] Speaker 5: basis points either way.
[16:13] Speaker 7: And how are you looking at hedging strategies as well.
[16:16] Speaker 5: The easiest way is to sell US dollar into NT. However,
[16:21] Speaker 5: the market impact should be considered. If we're not able
[16:24] Speaker 5: to sell all these, then we will do the four
[16:27] Speaker 5: contract and if we still cannot accommodate all the positions,
[16:32] Speaker 5: then we will continue to do moving the US dollar
[16:37] Speaker 5: to the offshore entity which has US dollar as its
[16:42] Speaker 5: functional currency.
[16:44] Speaker 2: That was TSMC Chief Financial Officer Guendel Juang speaking with
[16:48] Speaker 2: Bloomberg's Annabel Drulers in Taipei and bringing it to you
[16:51] Speaker 2: here on the Daybreak Asia podcast. Thanks for listening to
[16:57] Speaker 2: today's episode of the Bloomberg Daybreak Asia Edition podcast. Each weekday,
[17:02] Speaker 2: we look at the story shaping markets, finance, and geopolitics
[17:05] Speaker 2: in the Asia Pacific. You can find us on Apple, Spotify,
[17:09] Speaker 2: the Bloomberg Podcast YouTube channel, or anywhere else you listen.
[17:13] Speaker 2: Join us again tomorrow for insight on the market moves
[17:16] Speaker 2: from Hong Kong to Singapore and Australia. I'm Doug Prisoner
[17:20] Speaker 2: and this is Bloomberg

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