TSMC-Trump Agreement Heightens Taiwan’s Fears of US Technology Transfer; Officials Warn Taiwan May Lose Its Chip Dominance

TSMC’s recent agreement with the United States represents the company’s largest foreign investment to date. However, this development has stirred discontent among Taiwanese officials, who are apprehensive about potential technology transfers resulting from the deal.

Concerns Among Taiwanese Lawmakers Regarding TSMC’s US Investment Strategy

For those who may not be familiar, Taiwan Semiconductor Manufacturing Company (TSMC) has committed to a substantial $100 billion investment in the US. This initiative includes the establishment of four new manufacturing facilities in Arizona, along with an advanced packaging and research and development center. The agreement, signed in the Oval Office, stems from TSMC’s desire to mitigate the impact of “Trump tariffs, ”which anticipated increases of over 100%.While this move is expected to strengthen the domestic semiconductor industry in the US, it has raised alarms in Taiwan. Officials fear that TSMC’s pivot towards the US might erode Taiwan’s long-standing dominance in chip manufacturing, jeopardizing the integrity of the global supply chain.

As detailed in a report by UDN, Taiwanese legislators have voiced concerns that, despite TSMC’s partnership with the US, there are no guarantees regarding tariff exemptions for Taiwan. Furthermore, they highlight the absence of assurances from the Trump administration pertaining to “security”against regional threats posed to Taiwan. This lack of safeguards has led many to label the TSMC deal as a pressured agreement. If technology were to flow to the US, it could signal the gradual decline of Taiwan’s semiconductor industry, a sector that significantly enhances Taiwan’s geopolitical value.

TSMC getting N3E orders from various clients

In response to these concerns, TSMC has reassured Taiwanese stakeholders that its expansion into the US will not diminish Taiwan’s critical role in the semiconductor supply chain. The company asserts that its core technological capabilities will remain in Taiwan, driven by a considerably larger research and development workforce compared to that in the US. Additionally, TSMC has confirmed that all advanced node production will remain concentrated within its Taiwanese facilities, with other countries handling older generations of technology. To further demonstrate its commitment to Taiwan, TSMC has announced plans to establish four new facilities on the island.

The diversification of the supply chain is poised to intensify as TSMC scales its operations in the US, reducing Taiwan’s status as the exclusive provider of mainstream semiconductors. Observers are keenly watching how TSMC navigates its future in the US environment, especially given the substantial commitments required under the current administration, which only amplifies Taiwan’s concerns.

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