Thu, Mar 06, 2025 page12

• What TSMC’s $100 billion investment in the US means for Taiwan

  While the chipmaker’s latest investment might deflect the threat of tariffs, there are fears it could still hurt the economy

  • AFP, TAIPEI
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  Taiwanese chip-making giant Taiwan Semiconductor Manufacturing Co (TSMC) plans to invest a whopping US$100 billion in the US, after US President Donald Trump threatened to slap tariffs on overseas-made chips.

  TSMC is the world’s biggest maker of the critical technology that has become the lifeblood of the global economy.

  This week’s announcement takes the total amount TSMC has pledged to invest in the US to US$165 billion, which the company says is the “largest single foreign direct investment in US history.”

  

  The Taiwan Semiconductor Manufacturing Co (TSMC) fabrication plant in Phoenix, Arizona, US, on Monday.

  Photo: Bloomberg

  It follows Trump’s accusations that Taiwan stole the US chip industry and his threats to impose tariffs of up to 100 percent — and Taipei’s promises to invest more in the US.

  The following is a look at what TSMC’s investment could mean for Taiwan.

  ‘SILICON SHIELD’

  

  US President Donald Trump on Monday shakes the hand of C.C. Wei as he announced an investment of a US$100 Billion, four-year investment into American Chip manufacturing by Taiwan Semiconductor Manufacturing Co (TSMC).

  Photo: AFP

  Semiconductor chips are used in everything from smartphones and televisions to electric vehicles and missiles — and more than half of them are made in Taiwan.

  The concentration of chip manufacturing has long been seen as a “silicon shield” protecting the country from an invasion or blockade by China — and an incentive for the US to defend it.

  China has upped military pressure on Taiwan in recent years to press its unfounded claim of sovereignty over the country, where TSMC has its headquarters and the bulk of its fabrication plants.

  That has fueled calls for the firm to move more of its production out of the country to avoid supply disruptions if China did attack. Trump recently warned of import levies of 25 percent, or higher, on overseas-made chips, which one analyst has said could trigger a recession in the industry.

  While TSMC’s latest investment might deflect the threat of tariffs, there are fears it could hurt Taiwan’s economy and weaken its “silicon shield.”

  “The more TSMC produces in the United States, the less important Taiwan will be in geopolitics and the less incentives the United States will have to help Taiwan in the future,” said Ko Ju-chun (葛如鈞), a lawmaker with the main opposition Chinese Nationalist Party.

  CONTROL OF TSMC

  Taiwan’s leaders are aware of the risks as they try to stay onside with their most important security backer Washington and protect the nation’s status as a chip-making powerhouse.

  President William Lai (賴清德) office said Tuesday the government would review TSMC’s deal “in accordance with the law” and ensure that the “most advanced” chip-making processes stayed in Taiwan.

  TSMC had already pledged to invest more than US$65 billion in three factories in the US state of Arizona, one of which began production late last year. The US$100 billion investment will be used to expand its US footprint further, with three new fabrication plants, two advanced packaging facilities and a research and development team center.

  Richard Hu (胡瑞舟), deputy director of the Taiwan Center for Security Studies think tank, said Trump wanted to prevent TSMC from falling into China’s hands and to make it a “technological asset of the United States.”

  “Trump’s ultimate goal is to ensure that the US can fully or critically control TSMC’s semiconductor production, making it a de facto part of America’s chip industry,” Hu said.

  DEFENSE GUARANTEES

  Taipei security analyst Su Tzu-yun (蘇紫雲) was more optimistic, saying that TSMC’s investment would make Taiwan “safer” and help grow the chip industry.

  It would also build trust between Taipei and Washington, and ease Trump’s concerns about US economic security, said Su, from the Institute for National Defense and Security Research.

  “I think the importance of Taiwan is not only TSMC but also the geostrategy,” Su said, noting the importance of global shipping lanes near Taiwan.

  However, James Yifan Chen of Tamkang University said higher manufacturing costs in the US would drive up prices of products using TSMC chips.

  And there were no guarantees the investment would make the mercurial Trump more inclined to defend Taiwan.

  “The deal’s effect on US willingness to defend Taiwan is unclear,” said Sung Wen-Ti (宋文笛), a nonresident fellow with the Atlantic Council’s Global China Hub.

  “It really depends on how Trump feels on any particular day, and whether Beijing will attempt to outbid Taiwan subsequently.”
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