The Taiwanese government has pledged that its most pre-prepared semiconductor technology will not be transferred to the United States under a new $100 million (£790 billion) deal signed between chipmakers TSMC and Donald Trump, amid accusations that it is allowing the island to undermine national security.
The government said the deal still needs to go through government evaluation. The government’s assessment takes into account the interests of the nation as well as investors.
A surprising announcement by Trump and CC Wei, CEO of Taiwan Semiconductor Manufacturing Co (TSMC) on Monday prompted the controversy and confusion in Taiwan, where industry is crucial to its economy and national security.
On Monday, TSMC said it would build five new “state-of-the-art” facilities in US soils, increasing its existing US investment by $100 million.
Trump said the deal means that TSMC will avoid 25% of the industry-wide tariffs in its efforts to bring more manufacturing to the United States and tossing US control of trade against rivals and allies. Wei said the deal means that TSMC will “produce the most sophisticated chips in US soil.”
The statement has been questioned by a pledge from government officials that strictly protected technology will remain on the ground. President’s office spokesman Karen Kuo said the government will ensure that TSMC will “maintain the most sophisticated manufacturing processes in Taiwan.”
However, details of the restrictions are unknown. In November, Taiwanese officials and media said TSMC would begin production of the most sophisticated 2-nanometer chips at its US facility from around 2028. I asked if this is still true. Officials said Tuesday that “2NM and 1.6NM (chips) will not be produced in the US next year.”
The TSMC and the Ministry of Economy have been contacted for clarification.
The government’s statement also suggested that TSMC has not yet applied for government approval necessary for foreign investments of that size when the transaction was announced. Taiwan’s Economy Minister Kuo Ji Huei said the valuation “takes into consideration the interests of investors and the country.”
However, Kuo emphasized that the firm has “complete knowledge” in advance about TSMC-related investments.
TSMC produces almost all of the world’s most advanced semiconductors, and the industry is often referred to as Taiwan’s “silicon shield” and encourages Taiwan to support China’s invasion in order to protect the US and its allies from Beijing’s control.
Opposition figures say the deal will reduce Taiwan’s defenses. However, the Defense Minister said he is confident that the US will protect Taiwan.
“Trapping Taiwan’s technology sector will reduce the power of Taiwan’s “silicon shield”,” said James Yi-Hwan Chen, an assistant professor in the Faculty of Diplomacy and International Relations at Tankan University in Taiwan. “Taiwan, which has no semiconductors or high-tech industries, will become like Ukraine, which has no nuclear weapons.”
The deal attracted criticism from Taiwan’s opposition parties. Fu Kun-chi, leader of the KMT Legislative Caucus, asked, “If TSMC becomes ASMC and there is no sacred mountain to protect the country, where will Taiwan’s national security be?
“The more TSMCs are generated in the US, the less geopolitical it will be in Taiwan and the less the US will need to help Taiwan in the future,” said KMT MP Ko Ju-Chun.
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On Monday, Trump said Taiwan’s invasion would be “devastating,” but TSMC’s investment reduced the impact on US profits. “(That) is, at least for us… this very important business, and we’re going to be a very big part of the US,” he added.
Trump’s second term of office is characterized by the maintenance of US foreign policy, including Ukraine’s stunning rejection in the defensive war with Russia.
Taiwan has long seen similarities between Russia’s invasion of Ukraine and the threat of China’s own invasion, but despite Trump repeatedly questioning the value of continuing to support Taiwan, Taipei’s government has hesitated to criticize or question its most powerful and important supporter leader.
Taiwan’s Defense Minister Wellington Ku said he is still “confident” that the US will not abandon Taiwan. Koo said that “rapid and strange” changes in the international situation have raised questions about Trump’s core interests, but he believes the Taiwan War is too expensive to cause it.
“I don’t think it’s possible for the US to withdraw from the Indo-Pacific, whether it’s from an economic growth, political views or military security perspective.
The Taiwanese government is calling for Trump to stop the imposition of tariffs on Taiwan and important industries. He sent government delegations to Washington, pledging to increase defense spending and reduce the trade surplus with the United States. The TSMC deal was widely seen as a move to avoid tariffs, Trump said it was achieved, but Kuo on Tuesday rejected the proposal it was associated with.
“TSMC already has factories in the US and Japan, and now they are building new plants in Germany,” Kuo said. “These have nothing to do with tariffs. TSMC’s global expansion is a critical development.”
Additional Reports by Jason Tzu-Kuan Lu and the Agency
