As an experienced negotiator, US President Donald Trump is accustomed to providing ambiguous answers. When asked by the media how he would respond if China took military action against Taiwan, Trump has always responded by saying that Beijing would never take military action against Taiwan so long as he is in power — therefore, it is a non-issue. Although his response is true, those skeptical of the US argue it demonstrates a lack of a clear commitment.
After Taiwan Semiconductor Manufacturing Co (TSMC) on Monday last week announced it would invest an additional US$100 billion into the US — much to Trump’s delight — reporters once again asked Trump about the issue of China invading Taiwan. Trump responded by saying the US would have “a big impact if something should happen with Taiwan.” In other words, when TSMC is willing to become a lifelong partner of the US, Trump’s level of commitment appears to increase.
Trump’s response echoes a statement made by his old friend, former Japanese prime minister Shinzo Abe. If Taiwan is in trouble, the US is in trouble.
With its investment, TSMC has made a significant contribution to the advancement of Taiwan’s foreign diplomacy and national security. Although the move undoubtedly warrants respect, it is not a sacrifice on TSMC’s part — it is extremely beneficial for the company.
Trump had originally threatened tariffs if TSMC did not rescue Intel, but with the Taiwanese firm committing to setting up more plants in the US, it can leave Intel to fend for itself — TSMC does not have to worry anymore about getting burned.
Trump is also attempting to use this deal to end the semiconductor subsidy program passed during the administration of former US president Joe Biden — the CHIPS and Science Act — which is good for TSMC.
With each generation of semiconductors, the investment required is increasing. TSMC’s capital expenditure is expected to reach US$38 billion to US$42 billion this year — a level that its financially struggling competitors could not even dream of matching. The US$3.9 billion in subsidies and US$7.5 billion in loans provided by the Biden administration, if fully utilized, would provide TSMC’s main competitors with the financial means to compete.
If Trump’s push to repeal these subsidies is successful, it would ultimately ensure that TSMC remains the industry’s undisputed leader.
Taiwan has long hoped to establish its own great multinational corporations, and TSMC has already reached that stage. However, the challenges of adapting to other countries’ labor laws and government regulations have hampered its willingness to expand. Trump gave them a push, urging TSMC to grow and accelerate its understanding of multinational operations.
TSMC decentralizing its research and development (R&D) efforts provides the company with increased security and stability. Intel was once invincible until its core R&D team in the US went down the wrong path with its Pentium 4 processor — it was the Israeli R&D team that developed the Pentium M processor, ultimately saving the entire company. Industrial development requires bold steps forward — remaining stagnant is not an option.
TSMC is in its heyday. However, once an industry reaches its peak, it would inevitably and gradually enter a phase of maturity. Intel’s position in the industry was once far higher than TSMC’s today, and Nokia was once Finland’s sacred protector — today, neither company is as remotely influential. This is simply a part of the natural rise and decline of the industrial cycle. For a country to develop sustainably, it should not cling to its “sacred protectors” — rather, it should continuously foster new generations of industries.
TSMC has absorbed a large amount of talent. Coupled with the impact of Taiwan’s low birthrates, other industries are now often forced to hire anyone who possesses basic skills, thereby leading to a shortage of employees in the fields of science and engineering. This is partly because many university graduates directly enter TSMC, with few choosing to pursue studies abroad for a graduate or doctorate degree.
TSMC alone brings in a significant amount of foreign currency, which places great pressure on the appreciation of the New Taiwan dollar. Other export industries face disadvantages as a result. Given this situation, how can Taiwan effectively nurture the next industry?
Taiwanese should welcome TSMC’s decision to redistribute a portion of its production capacity to the international market and release some resources. There is no need to worry about the loss of the nation’s so-called “silicon shield.” The US has been protecting Taiwan since the Korean War — did Taiwan have a semiconductor industry back then?
Tommy Lin is president of the Formosa Republican Association and the Taiwan United Nations Alliance.
Translated by Kyra Gustavsen
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