Thu, Mar 06, 2025 page9

• Analyst sees political rationale behind TSMC deal

  • Staff writer, with CNA, Washington
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  Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) new planned investment of US$100 billion in the US “doesn’t seem to make sense economically, but does have a strong political rationale,” a Heritage Foundation researcher said on Tuesday.

  In an e-mail reply to a Central News Agency (CNA) inquiry, Michael Cunningham, a research fellow at the Heritage Foundation’s Asian Studies Center, said that with US President Donald Trump now threatening tariffs, many countries and companies, including Taiwan and TSMC, were trying to make the best of difficult times.

  As to why TSMC, a private firm, would be motivated by a “strong political rationale,” Cunningham said that the company “faces tariff threats and is trying to do all it can to signal its commitment to the US and counter the narrative that its dominance in chip manufacturing harms US interests.”

  

  A Taiwan Semiconductor Manufacturing Co fab in Phoenix, Arizona, is pictured on Monday.

  Photo: Bloomberg

  “TSMC and Taiwan are doing all they can to adjust to this new reality and show the Trump administration — and the American people — that they are actively contributing to US priorities,” he said.

  TSMC, the world’s largest contract chipmaker, on Monday announced that it would invest an additional US$100 billion in Arizona over the next four years to set up three chip fabrication plants, two advanced packaging plants, and a research and development center.

  TSMC has already committed to investing US$65 billion in Arizona to build three wafer fabs.

  The first fab in Arizona has started production using the 4-nanometer process, while the second fab, which would be using the more sophisticated 3-nanometer, 2-nanometer and A16 processes, is under construction and is expected to begin production in 2028.

  　The third fab is expected to begin production by 2030 using 2-nanometer or more advanced processes, TSMC said in April last year.

  Many analysts have raised concerns that much higher production costs in the US would erode TSMC’s profit margin and affect its cash dividend payout.

  Cunningham cited Trump’s comments in a news conference with TSMC chairman C.C. Wei (魏哲家), in which the US president said chips made in Taiwan would eventually face tariffs.

  It is possible that Trump would no longer be in office before the new investments start to roll out chips, so “it’s unclear how the announcement will have any impact on possible tariffs during Trump’s term unless some agreement was made as a condition of the investment, though I haven’t seen any reports of this being the case,” Cunningham said.

  Thomas Shattuck, a senior program manager at the University of Pennsylvania’s Perry World House, told CNA in an e-mail response that TSMC’s new investment has been widely expected in the wake of Trump’s tariff threats.

  “When Trump came into office, I emphasized the two things that Taiwan would need to do to lower the heat from Trump: a huge arms package request and more investment from TMSC,” Shattuck said.

  The latest pledge simply signaled TSMC’s hopes to minimize the possibility of a tariff on Taiwanese chip manufacturing through more investments in the US, which has been the primary economic goal of the Trump administration, Shattuck said.

  Cunningham said whether TSMC pledges more investments in the US or not, it is hard for Washington to stay out of any war involving Taiwan, while Shattuck said he did not see any direct connection between the investments and Trump’s decision to defend Taiwan.

  “Obviously, more Taiwanese investment in the USA could help change Trump’s attitude towards Taiwan, but the full effect and connection will remain unknown until the time comes when such a decision would need to be made,” Shattuck said.
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