A surprise $158 billion investment by Taiwan Semiconductor Manufacturing Company (TSMC) in the US, announced at a White House ceremony, has sparked controversy in Taiwan. Concerns arose regarding potential political pressure forcing the relocation of its crucial semiconductor industry, described as a “silicon shield” against China. While Taiwan’s president reassured the public, critics accused the ruling party of compromising national security for perceived US protection. This investment, however, is viewed by some as a strategic move to meet US customer demand and mitigate supply chain risks.
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President Trump plans to impose tariffs of up to 100% on foreign-produced computer chips and pharmaceuticals, aiming to reshore production to the United States. This action specifically targets Taiwanese semiconductor manufacturers, like TSMC, despite their investment in an Arizona facility. Trump criticizes the CHIPS and Science Act, arguing that financial incentives are unnecessary and that tariffs will incentivize domestic production. However, the long lead times for chip factory construction mean that significant price increases for consumers are a likely consequence.
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The Biden administration finalized a $6.6 billion award to Taiwan Semiconductor Manufacturing Company (TSMC) for its Arizona semiconductor fabrication plants, a crucial investment for U.S. economic and national security. This funding, derived from the CHIPS and Science Act, supports TSMC’s $65 billion investment creating thousands of jobs and boosting domestic chip production. The award’s timing, just days before the election of President Trump, who opposes the deal, was emphasized by officials to ensure the project’s continuation. The funding is contingent upon TSMC meeting construction and production milestones, solidifying a commitment to bolstering the U.S. semiconductor industry.
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Taiwan has reportedly banned TSMC from producing its advanced 2nm chips outside of the country, citing concerns about protecting its core technologies. This decision, made by the Taiwanese government, comes amidst growing tensions with the United States, particularly regarding TSMC’s expansion into Arizona. While TSMC has benefited from US incentives like the CHIPS Act, the Taiwanese government is concerned about potential technology transfer and believes it’s essential to maintain its technological edge in the global semiconductor market. While TSMC may eventually produce 2nm chips abroad, its core technology will remain in Taiwan.
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John Q. Hosedrinker