Taiwan Semiconductor Manufacturing Co. (TSMC) has announced plans to enhance its investment in the United States by $100 billion, aiming to build five new state-of-the-art semiconductor facilities. This decision, revealed in a joint announcement by former President Donald Trump and TSMC CEO CC Wei, aims to bolster U.S. manufacturing capabilities and strengthen trade dominance. Despite these ambitions, TSMC will not be transferring its most advanced 2-nanometer and 1.6-nanometer chip production to American soil, a move that has sparked controversy and raised questions about Taiwan's strategic interests.
The semiconductor industry is often called Taiwan's "silicon shield," reflecting its crucial role in both the economic and national security landscape. TSMC produces nearly all of the world's most advanced semiconductors, making it a vital asset in the global tech arena. The U.S. and its allies continue to support Taiwan against potential Chinese aggression, seeking to prevent such advanced technology from falling into Beijing's hands.
“[It] will at least give us a position where … in this very, very important business, we would have a very big part of it in the US,” – Donald Trump
Despite the substantial investment, Taiwan's government has assured that the most advanced semiconductor technology will remain on the island. Kuo Jyh-Huei, Taiwan's Minister of Economic Affairs, emphasized that decisions regarding technology transfer would be made with the interests of both investors and the country in mind. This stance is part of Taiwan's efforts to maintain its strategic edge and avoid becoming overly reliant on foreign production.
“next year, 2nm and 1.6nm [chips] will not be produced in the US” – economics minister
The recent announcement has caused a stir within Taiwan, where the semiconductor industry is integral not only to the economy but also as a deterrent against geopolitical threats. The news has led to widespread debate about Taiwan's future role in the global tech landscape and the implications of increased U.S. production.
“Taking away Taiwan’s technology sector will reduce the power of Taiwan’s’ ‘silicon shield’,” – James Yifan Chen
James Yifan Chen further highlighted Taiwan's vulnerability should it lose its technological prowess, comparing it to Ukraine without nuclear weapons. This analogy underscores the importance of maintaining Taiwan's semiconductor industry as a critical component of its national security strategy.
“The more TSMC produces in the US, the lower Taiwan’s geopolitical importance will be, and the less incentive the US will have to help Taiwan in the future,” – Ko Ju-Chun
Ko Ju-Chun pointed out that increasing production in the U.S. could diminish Taiwan's geopolitical significance, potentially reducing American incentives to support Taiwan against external threats. The strategic balancing act involves weighing economic benefits against maintaining international partnerships and security assurances.
“TSMC already has plants in the US and Japan, and it’s now building new a plant in Germany,” – Karen Kuo
Karen Kuo noted that TSMC's expansion is part of a broader global strategy that includes facilities in Japan and an upcoming plant in Germany. While some speculate that avoiding industry-wide 25% tariffs could be a motivator for TSMC's U.S. investment, Kuo dismissed these claims, asserting the expansion is unrelated to tariff concerns.
“These have nothing to do with tariffs. TSMC’s global expansion is a crucial development.” – Karen Kuo