TSMC’s CEO, CC Wei, beamed as he stood alongside Donald Trump in the White House on Monday, announcing what he described as the largest foreign direct investment in U.S. history. TSMC, a leading producer of advanced semiconductors, plans to significantly expand its existing $65 billion presence in the U.S. with an additional $100 billion investment. This deal allows TSMC to sidestep substantial tariffs that Trump had indicated would impact the global chip industry. For the U.S., this investment translates to tens of thousands of construction jobs and the development of essential technology on American soil, reducing the risk of China gaining control over it should it ever annex Taiwan.
However, the agreement is not finalized. Taiwanese law mandates that TSMC obtain government approval for any foreign investment exceeding $1.5 billion, a small fraction of this deal’s total. President Lai Ching-te stated that the government would evaluate the deal with national interests in mind. The economic affairs ministry informed that no application has been submitted yet.
The deal has raised concerns among opposition members of the KMT, who argue it could compromise Taiwan’s security. KMT legislator Ko Ju-Chun remarked, “The more TSMC produces in the U.S., the less Taiwan’s geopolitical significance will be, and the weaker the U.S. incentive to support Taiwan in the future.”
Taiwan’s semiconductor industry, with TSMC as its most prominent player, accounts for up to 15% of the island’s GDP. It is often regarded as Taiwan’s “silicon shield,” providing leverage to encourage global support in safeguarding Taiwan and its critical chip supply from Chinese control. As Trump’s personal commitment to defending Taiwan appears to wane, this leverage becomes increasingly vital.
Lai’s office has assured that TSMC will retain its most advanced manufacturing processes in Taiwan, although this statement seems to contradict the assertions made by Wei and Trump during their White House announcement. Wei indicated that the deal would enable TSMC to produce the most advanced chips on U.S. soil, while Trump proclaimed that “the most powerful AI chips in the world will be made right here in America.”
When asked to clarify what “most advanced tech” the government intends to keep in Taiwan, especially since TSMC’s cutting-edge two-nanometer chips are already slated for U.S. production, the economic affairs ministry suggested that the focus is on human talent. They highlighted Taiwan’s esteemed STEM training-to-employment pipeline, which is crucial to the local chip industry’s success.
“This is highly dependent on Taiwan’s high-quality semiconductor talents, an advantage that is difficult for other countries to replicate,” the ministry stated. Kwei-bo Huang, a professor of diplomacy at Taiwan’s National Chengchi University, emphasized that the Lai administration must address the public’s growing concerns regarding the potential erosion of Taiwan’s silicon shield.
