Trump also said that with TSMC bringing investments and production into the US, the company will be able to avoid the proposed tariffs.
Taiwanese chipmaker Taiwan Semiconductor Manufacturing Co (TSMC) has unveiled its plans to invest $100 billion in the US and build five additional factories over the next few years. This plan was announced by TSMC CEO CC Wei in a meeting at the White House with President Donald Trump, who said that the company plans to build the chips and semiconductors in the US, as it is a matter of national security for them.
The chip giant is the leading supplier of chips to some of the biggest US tech firms like Apple, Intel, and Nvidia. Trump also said that with TSMC bringing investments and production into the US, the company will be able to avoid the proposed tariffs. According to Wei, the recently announced investments bring the total investments of the company into the US to $165 billion. He also said that TSMC is making its vision into reality and that it was producing the most advanced chips on US soil.
This $100 billion outlay will reduce the US’ dependence on Asian made chips by increasing domestic production. Former President Joe Biden had also enacted the CHIPS and Science Act in 2022, in a bid to expand chip production in the US. TSMC’s Arizona unit had benefitted from a subsidy included in this Act.
Trump has criticised this law and threatened companies with tariffs if they did not bring back production to the US. He has also dismissed the need for federal tax incentives for companies like TSMC.
Taiwan supplies a majority of the most advanced semiconductors globally and prefers to keep most of its production onshore under strict protection. Experts suggest that this improves global incentives to defend Taiwan against a potential Chinese aggression. The Taiwanese government has also announced that this investment would be reviewed to account for the company’s development and the competitiveness of the semiconductor industry.
Taiwan’s premier, Cho Jung-tai, recently said that the integration of various industries into the global supply chain requires close cooperation with the government. This explains the government’s interest in reviewing the TSMC investment deal, as Jung-tai expressed that the government and industries must work towards keeping its roots in Taiwan.
US Cabinet spokeswoman Michelle Lee also explained that it was due to the close cooperation between Taiwan and the US in high-tech industries that Taiwan has emerged as a leading partner to help the US maintain its premier position in high-tech and technology industries.
The government of Taiwan has the power to veto such an investment and has done so in the past. However, those deals were rejected due to incomplete documentation.
Along with signing lucrative deals with Washington, TSMC is also exploring potential deals which could split its rival, Intel’s market. Broadcom is also exploring similar deals, although neither company has admitted to working alongside one another. The Wall Street Journal reported that Broadcom has studied the chip designing and marketing unit of Intel and TSMC has separately studied its chip plants. Such a deal could potentially break the US chipmaker in two.
TSMC’s market valuation is eight times larger than that of Intel’s and its client list includes Nvidia and AMD, which are Intel’s competitors in the PC and server markets.
The US could announce more such deals, as companies have realised that the only way to bypass the Trump tariffs would be to comply with Washington and increase investment and facilitate production on US soil. Since assuming office in January, Trump has met with several business leaders and discussed potential opportunities to improve the US economy. Companies like Apple and Softbank have also pledged to increase investments, with Apple announcing to invest $500 billion over the next four years.
