inside us commerce secretary's tsmc pressure play
Washington, Wednesday, 27 August 2025.
us commerce secretary howard lutnick admitted to pressuring tsmc to ramp up its us investments. lutnick threatened to pull back a $6.5 billion subsidy if tsmc didn’t increase its commitment. this aggressive tactic resulted in tsmc announcing a staggering $165 billion investment in its arizona plant. this move highlights the us government’s strategy of leveraging financial incentives and strong-arm tactics to bolster domestic semiconductor production. lutnick also revealed a similar approach with intel, where the us secured a 10% stake in exchange for subsidies.
us strategy and tsmc’s response
Lutnick’s comments underscore a significant shift in how the U.S. government approaches foreign investment and domestic manufacturing [1][2]. The Trump administration is explicitly linking subsidies to tangible returns for the American people, moving away from what they view as unconditional corporate handouts under the prior administration [3][4]. This strategy, though aggressive, appears to be yielding results, with TSMC significantly increasing its investment in the U.S. [2]. TSMC’s increased investment includes an additional $100 billion, raising the total to $165 billion [3].
stock market reaction and analysis
The market has reacted to these developments, with TSMC’s ADR (TSM-US) showing a positive response [5]. On Tuesday, the stock rose by 1.26%, closing at $238.55 per share, which translates to approximately NT$1457, reflecting a 24.01% premium [5]. This increase suggests that investors view TSMC’s strategic importance in the U.S. market as a positive factor, despite the increased pressure to invest [5]. Experts suggest that the U.S. government’s investment in Intel will not pose a threat to TSMC [4].
manufacturing capacity and geopolitical considerations
TSMC’s expansion in the U.S. is expected to significantly boost domestic manufacturing capacity [2]. The Arizona plant is slated to begin production in late 2025 [4]. This increased capacity aims to reduce reliance on overseas production and enhance U.S. national security [3]. However, these moves also introduce geopolitical risks for TSMC, as it navigates the complex relationship between the U.S. and China [1]. These risks are exacerbated by the U.S. government’s restrictions on Nvidia’s sales of AI chips to China [5].
intel’s situation and government involvement
The U.S. government’s approach with Intel further illustrates this strategy [1]. The government secured a 10% stake in Intel, valued at $11 billion, in exchange for subsidies [1][2]. This agreement came after Lutnick criticized the previous administration for providing $11 billion in subsidies to Intel without any reciprocal benefits [2]. Intel’s stock saw a 5.5% increase at closing following the announcement of the agreement [4]. However, Intel has also faced challenges, including delays in the production of its 18A process, attributed to unforeseen manufacturing difficulties [4].