A recent surprise event at the White House, led by President Donald Trump, announced a staggering US$100 billion investment from Taiwan Semiconductor Manufacturing Company (TSMC), touted as the world’s most potent semiconductor firm. However, this unveiling has sparked concerns in Taiwan, approximately 12,874 kilometres away, where fears over the potential loss of its semiconductor industry to the US are intensifying amid political pressures.
Former Taiwanese President Ma Ying-jeou has openly criticised the ruling Democratic Progressive Party (DPP), accusing it of “selling TSMC” to Trump as a form of protection fee, branding the situation a national security crisis. He warned that this development could significantly impact public confidence and Taiwan’s geopolitical position. In response to these anxieties, current President Lai Ching-te appeared with TSMC CEO CC Wei, asserting that the company’s investment in the US would not detract from its operations or expansion in Taiwan, where it already produces over 90% of the world’s advanced microchips.
Some Taiwanese citizens view their semiconductor industry as a “silicon shield” against potential Chinese aggression, given China’s claims over Taiwan’s sovereignty. Increasing military activity from China in recent years has heightened these concerns, with many Taiwanese drawing parallels between their situation and the geopolitical tension faced by Ukraine.
US military support under the Taiwan Relations Act remains critical for Taiwan’s defensive posture against Chinese threats. Nonetheless, Trump’s recent comments have cast doubt on the long-term reliability of US- Taiwan relations, as he has accused Taiwan of undermining the US semiconductor sector and suggested it may need to pay for protection.
Amid these tensions, analysts believe that TSMC’s investment decision was a calculated move influenced by the demands of its American clientele, including tech giants like Apple and Nvidia. Meanwhile, TSMC has committed to maintaining its R&D and advanced chip production in Taiwan, reassuring its stakeholders of the stability of its operations back home.
Despite varied public reactions, ranging from apprehension about Taiwan becoming a bargaining chip to a more pragmatic acceptance of the political landscape, the investment’s announcement has been labelled a major strategic success for TSMC. The decision is anticipated to relieve some pressure on Trump while simultaneously setting the stage for further foreign investment in the US semiconductor sector, igniting a flurry of commitments from other tech companies.
Experts suggest that the ongoing dynamic between Taiwan and China will not solely hinge on its semiconductor industry, as broader geopolitical ambitions and strategic considerations also come into play. As the global landscape shifts, Taiwan’s leadership will need to navigate these intricate relationships carefully to safeguard its sovereignty and economic strengths.