Taiwan to invest $250B in U.S. chipmaking under new trade deal
The Trump administration has signed a landmark multi-billion-dollar trade deal with Taiwan aimed at helping the United States increase domestic semiconductor production.
Key Points:
- The US and Taiwan have reached a trade agreement on the construction of chips and chip factories on American soil.
- Taiwanese chip and technology companies will invest at least $250 billion in manufacturing capacity in the United States.
- The US will cap “reciprocal” tariffs on Taiwan at 15% and will commit to not applying reciprocal tariffs on generic drugs, their ingredients, aircraft components, and some natural resources.
According to CNBC, Taiwan Semiconductor Manufacturing Co. has acquired land and could expand in Arizona with this deal. Commerce Secretary Howard Lutnick spoke to Brian Sullivan in an interview on Thursday.
“They just bought hundreds of acres adjacent to their property,” Lutnick said. “I’ll let them go through with their board and give them time.”
“Regarding TSMC’s plans, the market demand for our advanced technology is very strong; we continue to invest in Taiwan and expand overseas; all the investment decisions are based on market conditions and customer demands,” a TSMC spokesperson told CNBC.
The announcement adds that future tariffs under the Section 232 framework will provide certain exemptions for companies that manufacture chips in the US.
Taiwanese companies building new U.S. chip factories, such as TSMC, will be able to import up to 2.5 times more capacity than the factories are building without paying tariffs under the system.
When the factories are completed, companies will be able to import 1.5 times their U.S. production capacity, Commerce said.
In exchange, the US will invest in Taiwan’s semiconductor, defense, artificial intelligence, telecommunications, and biotechnology industries. The press release did not specify a specific dollar amount tied to the US portion of the deal.
The news came a day after the Trump administration issued a statement reiterating the country’s goal of bringing more semiconductor manufacturing back to the United States, acknowledging that the process would take time because only 10 percent of semiconductors are made in the United States.
The US government has prioritized manufacturing cutting-edge chips in America as the fight for access to artificial intelligence semiconductors has become a major geopolitical issue.
“This dependence on foreign supply chains is a significant economic and national security risk,” the proclamation stated. “Given the foundational role that semiconductors play in the modern economy and national defense, a disruption of import-reliant supply chains could strain the United States’ industrial and military capabilities.”
US officials also said that China’s incursion into Taiwan and restrictions on TSMC’s chip purchases pose a significant risk to the US economy.
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