can tsmc's us expansion secure taiwan's trump card?

2025-03-31 tsmc

Taipei, Monday, 31 March 2025.
as geopolitical tensions escalate, tsmc’s growing presence in the u.s. appears to be strengthening ties between washington and taipei. taiwan is hopeful that even a trump administration will continue its support. this optimism stems from tsmc’s strategic importance and the u.s. drive to counter china’s tech dominance. amid concerns over potential us-china deals, taiwan sees tsmc’s investment as a way to ensure its strategic relevance in the eyes of washington.

us-taiwan relations amid shifting geopolitics

The Wall Street Journal reported on March 29, 2025, that TSMC’s increasing investments in the U.S. are strengthening the relationship between the U.S. and Taiwan [1][2]. This comes at a time when geopolitical tensions are on the rise and Taiwan is seeking ways to maintain U.S. support [1]. The Trump administration’s initial focus was on Europe and the Middle East, but TSMC Chairman Wei Zhejia’s visit to the U.S. in early March and subsequent investment plans have seemingly shifted the U.S. stance toward Taiwan [2].

trump’s evolving stance on taiwan

Initially, there were concerns that Trump’s ‘America First’ policy might lead to the U.S. abandoning Taiwan as a key ally [2]. Trump had previously criticized Taiwan for insufficient defense spending and for ‘stealing’ America’s semiconductor business [2][7]. However, following TSMC’s increased investment, Trump has softened his rhetoric, praising TSMC and refraining from mentioning Taiwan when criticizing trade partners that take advantage of the U.S. [7]. This shift suggests that TSMC’s investment is helping to reshape the U.S. perspective on Taiwan [3].

tsmc’s strategic investments in the u.s.

TSMC’s commitment involves significant investments in Arizona. TSMC initially announced a $12 billion investment in December 2020 to build a semiconductor fabrication plant [1]. By 2023, this investment had increased to $40 billion [1]. TSMC started production at its first Arizona fab on March 26, 2025, and plans to begin production at its second Arizona fab in 2027 [1]. TSMC aims to reach full production capacity in Arizona by the end of the decade [1]. These investments are viewed as a strategic asset, strengthening the U.S. position in the semiconductor industry [3].

impact on manufacturing capacity and market leadership

TSMC’s expansion in the U.S. is crucial for boosting manufacturing capacity and maintaining market leadership [GPT]. While TSMC is expanding in the U.S., it is also expanding its 2-nanometer production in Kaohsiung [1]. SMIC is expected to complete the development of 5-nanometer chips this year, but at a 50% higher cost than TSMC, giving TSMC a competitive edge [1]. TSMC’s advancements in manufacturing technology solidify its position as a leader in the semiconductor industry [GPT].

geopolitical risks and market perceptions

Despite the warming relations, some analysts remain concerned about a potential ‘grand bargain’ between the U.S. and China, where the U.S. might pledge non-interference in Taiwan [2][7]. William Chung, an assistant researcher at Taiwan’s Institute for National Defense and Security Research, notes that Taiwan’s importance depends on the trajectory of U.S.-China relations [2]. He argues that the more U.S.-China relations deteriorate, the more likely the U.S. is to intervene in cross-strait security issues, and vice versa [2].

Bronnen

tsmc us-taiwan relations