TLDR
- Nvidia (NVDA) stock was down about 2% on Friday, and TSMC (TSM) also fell about 2%.
- Taiwan plans several U.S. industrial parks for AI hardware suppliers, with each costing up to $4 billion.
- The first park will be in Texas and could cost $2 billion to $4 billion.
- Taiwan will offer loan guarantees and help suppliers with U.S. rules and permits.
- Nvidia’s supply commitments rose from $119 billion in Q1 to $279 billion in Q2.
Nvidia (NVDA) stock was down about 2% on Friday as news broke of a Taiwanese plan to build U.S. industrial parks for its supply chain. TSMC (TSM) also fell about 2%.
Bloomberg reported the plan, citing Taiwan’s Economy Minister Kung Ming-hsin. Kung gave the interview on October 12.
Taiwan wants to build several industrial parks in the U.S. to support makers of AI hardware. Each complex could need up to $4 billion in investment.
The first site will be in Texas. Kung said it could cost between $2 billion and $4 billion.
How Taiwan Plans to Fund the Parks
Taiwan is working with the Taiwan Electrical and Electronic Manufacturers’ Association. The group will raise the money needed for the projects.
The government will also offer loan guarantees. It plans to help suppliers deal with local and federal regulations and permits.
The plan comes as Taiwan faces pressure to meet investment commitments under its trade deal with Washington. It also aims to lower geopolitical risks tied to tensions with China.
TSMC has pledged $265 billion for U.S. expansion. Foxconn and Wistron are also adding American production capacity to meet strong AI demand.
TSMC and Foxconn can fund and manage their own U.S. growth. Smaller suppliers may not have that option, and the parks are meant to fill that gap.
Nvidia CEO Jensen Huang spoke about these smaller firms in a Taipei speech earlier this year. He named dozens of parts makers and called them important to the global AI supply chain.
TSMC makes the chips, while Foxconn assembles products and builds AI servers. Their work supports Nvidia and AMD, along with cloud firms such as Meta and Microsoft.
Nvidia’s Supply Chain Pressures
Nvidia is dealing with shortages of key parts and rising memory costs. Demand for high-bandwidth memory remains high, which limits chip deliveries and pushes up prices.
In June, TrendForce reported that Nvidia’s planned supply of low-power DRAM for its Vera Rubin platform may cover only about 60% of its needs. That report added to worries about tight parts supply.
According to TipRanks, Wall Street has a Strong Buy consensus on NVDA. The average price target points to 49% upside.
Nvidia has raised its supply commitments to lock in key parts. They jumped from $119 billion in Q1 to $279 billion in Q2, which ended July 26.
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