TSMC, Taiwan and the Trump Administration: Who’s Holding the Cards?

In Taiwan, TSMC is often affectionately referred to as the "sacred mountain that protects the country" (保國聖山), and sometimes also, as a company with an "American DNA." Its main clients - Apple, Nvidia, AMD, and Qualcomm - are American. Its leaders come from top U.S. universities. Its founder, Morris Chang, and current CEO, C.C. Wei, worked at Texas Instruments, while its outgoing president, Mark Liu, recently set up a center of excellence at Berkeley, his alma mater.

Given the risk of war in the Taiwan Strait, will the Trump administration seek to transfer Taiwanese industrial capabilities to U.S. soil, or will it maintain the deterrence posture that enabled the deep integration between Silicon Valley and Taiwanese hardware?

On March 3, TSMC announced a $100 billion investment in the United States. Alongside Donald Trump, C.C. Wei unveiled the construction of an R&D center, two advanced packaging sites, and three new factories. This commitment adds to the $65 billion already being invested in Arizona, where the production of 4 nm chips began in late 2024, with gradual expansion to 3 nm and then 2 nm by 2030.

This announcement sparked heated debates in Taiwan. President Lai called it a "historic moment for U.S.-Taiwan relations." The opposition claims that TSMC acted without consultation with the government, even though the Minister of National Development, Liu Chin-ching, sits on the board. The choice of the White House, rather than the presidential palace in Taipei, for the announcement fueled these speculations. However, the timing of the announcement came at a strategic moment for U.S.-Taiwan relations. It was clearly intended to reassure amid the attempted political assassination of President Zelensky by the Trump administration and the suspension of U.S. military aid to Ukraine. Faced with a "you don’t have the cards" Ukraine, in Donald Trump's words, Taiwan may have played a card early, to maintain the initiative and shape US-Taiwan relations. But in a polarized context, where skepticism towards U.S. security guarantees is fueled by China, the Taiwanese opposition, and by Trump's policies on Ukraine, the hoped-for reassuring effect did not materialize. TSMC's stock fell by 4.19% on the day of the announcement.

The hypothesis of a strategic coordination between the Taiwanese government and TSMC is supported by several facts. In January, the Ministry of Economic Affairs formally decided to authorize TSMC's investment in 2-nanometer semiconductor production in Arizona. Since the early 2000s, the Taiwanese government had followed a stricter policy, requiring the maintenance of a two-generation lead for semiconductor production on Taiwanese soil. To justify this reversal, Minister of Economic Affairs J.W. Kuo cited "old rules," emphasizing that "times have changed." The late timing of this authorization coincides with the arrival of the new Trump administration in Washington, which demonstrates strategic management of investment authorizations by Taipei. At the end of February, J.W. Kuo clarified that while restrictions on technological generations for foreign investment have been lifted (except for investment in China), any joint venture involving TSMC is still subject to approval by the Taiwanese government.

Debates quickly focused on the lack of coordination between TSMC and the Ministry of Economic Affairs. It seems that the handling of the case was primarily led by the Presidential Palace, through the National Security Council, the key player in exchanges with the Trump administration. The absence of the Ministers of Economic Affairs and Foreign Affairs at the joint press conference between President Lai and C.C. Wei, contrasted with the presence of the National Security Council secretaries and the Presidential Administration, strengthening the idea of orchestration at the highest executive level. The opposition sees this as a marginalization of the Ministry of Economic Affairs, reduced to a mere administrative approval role. Despite remaining unknowns, everything points to a strategic investment timed to help manage Taiwan’s relationship with Washington.

The central question remains how much Taiwan is willing to pay to secure the security guarantee of the United States. Is TSMC at risk of giving up its technological lead under American pressure? Some view this as a fatal transfer of technology in the long run, while others believe that Taiwan is strengthening its influence in the long term.

The timing factor is crucial. TSMC's first factory in Arizona began volume production in late 2024, four years after its announcement in May 2020, the last year of the Trump administration. The decision to build a second factory, dedicated to 3-nanometer technology, was announced in December 2022, with a planned start of operations in 2028. The third factory, for 2-nanometer production, was announced in April 2024 and is expected to be completed by the end of the decade. It is thus possible that part of the investments announced by C.C. Wei alongside President Trump will not materialize during his second term.

Order books are already full, and by 2028, at the end of Donald Trump's second term, Nvidia and Apple will continue to depend on Taiwan for their supply, regardless of tariff levels. That year, the monopoly on 2-nm production in Taiwan will likely reach its peak in volume.

Concerns persist about the U.S. R&D center. Taiwanese business media view it as a way for American companies to catch up on advanced manufacturing. They point out that, although the United States still lacks a talent attraction strategy-particularly targeting Taiwan-at a sufficient scale for semiconductors, and lacks "flexible enough" pro-business policies, the establishment of an R&D center represents a major step in this direction.

While the trend is undeniably worrying, the scale of its impact remains uncertain. It is still unknown which segments of the value chain will be at the heart of the R&D center in the U.S. and to what extent it will remain subordinate to the Hsinchu hub. Meanwhile, TSMC continues to maintain a significant lead over its competitors, including Samsung, ASML, and SMIC, in terms of patents related to GAA architecture (Gate-All-Around, a transistor architecture based on an arrangement of nanosheets meeting the demands of advanced semiconductors). This technology, which is gradually replacing FinFET, is becoming the new standard for integrated circuits from the 2-nanometer generation onwards. Additionally, TSMC plans to introduce the A16 process in 2026, an advanced technology based on nanosheets, allowing it to cross the 2-nm threshold and integrating a new power architecture designed to optimize chip density and performance. Simultaneously, the company is investing heavily in the development of COWOS, a packaging technology essential for heterogeneous integration, which is in preparation for commercialization. TSMC's expansion in Japan has been accompanied by strategic industrial partnerships aimed at accelerating COWOS industrialization. Similarly, TSMC will seek to further align its R&D priorities with American innovation, even as the level of integration between the Taiwanese and American ecosystems is already very high.

Are the $100 billion investments announced part of a strategy to circumvent potential future tariffs on Taiwanese semiconductor imports to the United States? TSMC's institutional communication consistently highlights the same argument: the company is serving its customers; if they are able to absorb the costs of geographic proximity, TSMC is ready to invest. C.C. Wei thus justifies 4-nm production in the U.S. as 20 to 30% more expensive than in Taiwan.

Regardless, TSMC and Taiwan still have "strong cards" to preserve their technological edge and avoid weakening their position.

Copyright Andrew HARNIK / GETTY IMAGES NORTH AMERICA / Getty Images via AFP
U.S. President Donald Trump and Taiwan Semiconductor Manufacturing Company (TSMC) CEO C.C. Wei in the Roosevelt Room of the White House on March 3, 2025 in Washington, DC.