In a surprising ceremony held at the White House, former U.S. President Donald Trump announced that Taiwan Semiconductor Manufacturing Company (TSMC) would invest $100 billion (approximately $158 billion USD). Trump hailed TSMC as "the most powerful company in the world," underscoring its significance.
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03-17, 2025However, the atmosphere was markedly different in Taiwan, roughly 12,874 kilometers from the White House. The sudden announcement last week reignited concerns among Taiwanese citizens that Taiwan's "crown jewel," its world-leading semiconductor industry, might be lost to the United States due to political pressure.
Former Taiwan leader Ma Ying-jeou swiftly accused the ruling Democratic Progressive Party (DPP) of "selling" TSMC to Trump as a form of "protection money." Ma, a member of the opposition Kuomintang (KMT), wrote on his Facebook page on March 4 that this was "a major national security crisis." He also stated that it would have "a major negative impact on people's confidence, cross-strait relations, and Taiwan's future geopolitical position."
In an effort to reassure the public, Taiwan's current leader, Lai Ching-te, appeared alongside TSMC CEO C.C. Wei at the leader's office in Taipei last week. Lai stated that TSMC's investment in the United States would not diminish its commitment and expansion plans at home. Wei emphasized that TSMC's investment in the U.S. was made in response to "strong demand" from U.S. customers, aiming to mitigate potential supply chain risks.
TSMC produces over 90% of the world's most advanced microchips, which power everything from smartphones and artificial intelligence to weapons. As a result, many Taiwanese people believe that the world's reliance on Taiwanese semiconductors constitutes a "silicon shield" that can deter a possible invasion by China. But Trump administration officials have also stated they need to reduce their involvement in European security in order to focus on Asia and address the threat from China.
Trump has previously accused Taiwan of "stealing" America's semiconductor industry, a claim that is widely disputed. He has also been outspoken in saying that Taiwan should pay for America's "protection." For many Taiwanese, the phrase "Ukraine today, Taiwan tomorrow" has resonated increasingly in recent weeks, as they have seen Trump upend long-standing U.S. policy by echoing Kremlin talking points and cozying up to Moscow while alienating traditional European allies and Kyiv.
Others appear less concerned. Mr. Lin, a professional in the financial industry, stated that he believes TSMC made a prudent decision. "Who doesn't pay protection money to the United States? There is no doubt that this is a form of protection money, which we can understand, but that is the reality of international politics," he said.
Researchers say that comparisons between the security environments of Ukraine and Taiwan have limitations, and they argue that Taiwan's security is influenced by a multitude of factors beyond just its semiconductor industry, including China's broader geopolitical ambitions and Taiwan's strategic location. Min-yen Jiang, a non-resident research fellow at the Institute for Democratic Governance and Emerging Technologies, stated that whether China takes military action against Taiwan ultimately depends on its core interests, which are not entirely dependent on Taiwan's role in global chip production.
TSMC received $10.2 billion in grants for its first three plants in Arizona. The grants come from the bipartisan CHIPS Act, spearheaded by the Biden administration, which allocates $61.6 billion in federal funding to boost domestic semiconductor manufacturing. Wei added that TSMC is "not afraid" of Trump potentially canceling the CHIPS Act subsidies, emphasizing that the company's decision to invest in the U.S. is driven by customer demand.
Semiconductor analysts have expressed appreciation for the company's "flexible" decision-making. Ming-Chi Kuo, an analyst at TF International Securities, praised TSMC as "the most successful non-U.S. company in negotiating with the Trump administration" in an online analysis report. He wrote: "While the $158 billion investment seems large, the lack of details provides flexibility in spending based on future circumstances, thereby mitigating the impact on profitability."
TSMC's investment has largely eased Trump's concerns. Mr. Chen, a market research analyst at Digitimes Research, stated: "Of course, we cannot know when Trump will change his position—he is known for sudden shifts."
Trump has previously threatened to impose tariffs of 25% on semiconductors, automobiles, and pharmaceuticals as early as next month. Commerce Secretary Howard Lutnick stated when announcing TSMC's investment that the company chose to expand in the U.S. because of the threat of tariffs and did not receive additional grants. Trump is expected to increase pressure on other major companies in the wake of TSMC's investment announcement.
