In January, TSMC CEO C.C. Wei gave a speech at a university in Taiwan, complaining about the difficulties and high costs of setting up a factory in Arizona. When asked if TSMC would become “USMC” (a play on words implying an Americanized TSMC), he bluntly replied, “Not a chance.” A little over a month later, Wei “very happily” announced a $100 billion investment at the White House’s Roosevelt Room, thanking the U.S. president and customers.
This $100 billion investment includes three chip factories, two advanced packaging plants, and one R&D center. Combined with investments from the Biden era, the total reaches $165 billion, all in Arizona. If there’s anything different about this investment compared to the last one, it’s the R&D center. Previously, TSMC’s R&D centers were only established in Taiwan, meaning the U.S. will now have real-time access to TSMC’s most advanced technology. In addition, this time, there are no subsidies—not a single dollar.
TSMC is dubbed Taiwan’s “Holy Guardian Mountain, and, as I mentioned before, this company accounts for 35%-40% of the Taipei Stock Exchange’s market value. It’s seen as a “silicon shield”, or a moat that is deeply connected to the world economy, and that can save Taiwan from being invaded by China. In simple terms, beyond its economic significance, TSMC is intricately bound to Taiwan’s security—its fate is Taiwan’s fate.
The question is, will 100 billion dollars be enough? Will it be enough to allow the company to operate without geopolitical interference and to satisfy Taiwan’s security concerns? No, the answer remains unresolved.
Donald Trump, a rather shrewd man, said in the Roosevelt Room, “They will be investing at least $100 billion dollars in new capital in the United States over the next short period of time to build state-of-the-art semiconductor manufacturing facilities “. Taiwanese media didn’t emphasize the “at least $100 billion,” leading readers to assume this check was the final one and breathe a sigh of relief, thinking TSMC could afford a $10 million “insurance policy”—even though TSMC’s ADR dropped 4.19% that day.
However, this might just be a down payment. and Trump’s seemingly offhand remark leaves room for the U.S. to add more.
Beyond that, the media widely headlined another of Trump’s statements: “It would have a big impact if something should happen with Taiwan.”. This stemmed from a reporter’s question: “Could this project minimize the impact of the U.S. with chips should China decide to isolate Taiwan or China decide to take Taiwan? “”.
Trump seemed prepared for this. He didn’t frame the investment as a perfect contingency for the U.S. to hedge against a potential war but rather as a partial buffer against chip shortages if war broke out. Thus, he said that it would have a big impact if something should happen with Taiwan.
This could imply two things: a) TSMC’s investment in the U.S. isn’t enough yet, or b) China shouldn’t assume the U.S. will abandon Taiwan. In this press conference, Trump’s key stance planted the seeds for future negotiations between the U.S. and Taiwan, as well as the U.S. and China, while retaining bargaining chips.
With such a skilled negotiator as president, Americans are fortunate, but people in other countries—not so much. For instance, Europe’s ASML won’t be pleased with TSMC’s situation, as the next company walking into the Roosevelt Room with a big check to “thank” Trump might be ASML.
Despite issuing a $100 billion check, the security issues of TSMC and Taiwan remain unresolved. No matter how warm the press conference felt, this is the cold reality. Trump has repeatedly accused Taiwan of stealing America’s chip business. Now, Caesar’s has been returned to Caesar, but Taiwan’s doesn’t belong to Taiwan.
Considering that just days ago, Ukraine’s President Zelensky had a globally shocking verbal clash with Trump in the White House. Zelensky appeared tough but ultimately bowed to the U.S. and agreed to sign a “mineral deal with no security guarantees.” TSMC’s “$100 billion project” might not pose a question mark but a period: the U.S. won’t provide Taiwan with security guarantees—ever.
The only question mark is: Whether it’s the ‘mineral deal’ or the ‘$100 billion project,’ is this the last check?
