Taiwan Semiconductor Manufacturing Company ( TSMC), in response to President Donald Trump’s obvious “pay for protection” bribery, recently pledged US$ 100 billion to create more chip factories in Arizona, in addition to the three it already has there.
The action lacks any firm rationale to support it. Instead, TSMC is betting that Trump’s personality and” America First” mission will persuade him that a sovereign Taiwan likewise benefits America’s interests.
But, any wager on Trump is a risky game of chance, and this one could unwittingly put Taiwan’s death in greater danger. To live the whims of the White House, Taiwan will need to awaken its best poker abilities.
90 % of the most advanced semiconductor chips used in security devices, quantum computing, and artificial intelligence are produced by TSMC. The world’s dependence on this dominance provides a” golden shield” against possible anger from China, which claims the self-governing peninsula as part of its territory.
Trump wants to cultivate peppers on US ground to lessen its dependence on international supply chains, foster high-paying local production jobs, and advance national security interests.
Add Taiwan’s competitive advantage to America’s economic and military utilize, and the result is a clumsy bumper sticker that reads” Make America Great Again ( by making Chinese chips )” ( Make America Great Again ).
Unconvincingly, TSMC asserts that the company’s current operations in Arizona are the result of sound business principles rather than political force.
After speaking with TSMC employees and visiting the construction sites, I can tell you that the project is still plagued by delays, cost overruns, skilled labour shortages, angry workers, operational inefficiencies, and an immature offer network ecology.
Certainly, the foundry’s Arizona functions will be profitable for a while. Question Morris Chang, the former CEO and founder of TSMC, who acknowledged that Arizona’s chip production cost at least 50 % more than a Chinese factory. The company’s stock price, ironically, dropped nearly 5 % the day Trump announced the most recent stock offer.
If TSMC’s main priorities were profitability and shipping, it would undoubtedly result in more businesses in Kumamoto, Japan. There were two companies built on time and within budget. Contrary to Arizona, Japan already has a silicon habitat with seasoned chip engineers and manufacturers and reputable logistics and supply chains.
The local authorities, public universities, and even small organizations all assistance TSMC’s Asian factories. When I went to Kumamoto last year to prepare for the arrival of TSMC’s Japanese employees, I discovered supermarkets stocked with common Chinese foods like chicken feet, pig liver, and life fish.
Taipei may be wise to consider Trump’s real interests, which is undoubtedly more difficult to say than do. We all know how madly different from day to day Trump’s moods are.
Take taxes on and off in the case of Mexico and Canada. Trump’s position on Taiwan currently seems to be that it treats the US badly, he claimed, but that its leading device business, TSMC, is still on par.
During the notorious dressing-down of Ukrainian President Volodymyr Zelensky at the White House, Trump vehemently retorted, “You’re never in a good place.” You are at the mercy of the tickets at this moment. What, in the end, does Trump think sets Taiwan but apart from Ukraine?
Does Trump actually worry about Taiwan’s long-term freedom? Had Trump be willing to trade Taiwan to Beijing for, say, a significant trade deal if Taiwan gave up its high-tech benefit to the US?
With its most recent vow, there are good chances that TSMC has just marginally appeased Trump. Trump may launch a new campaign and demand more from TSMC.
He might continue to press TSMC to get over Intel’s failing US chip factories, which would involve tens of billions of dollars and some years to revamp and upgrade.
Now, the evidence points to the ineffectiveness of TSMC’s deference. According to sources within the Trump administration, Chinese chip exports may still be subject to tariffs of up to 100 %.
Additionally, Trump is asking Congress to repeal the CHIPS Act, which was passed in 2022 to support local chip manufacturing. Thus, it’s unclear whether TSMC will receive the$ 6.6 billion that the act promised.
The Chinese government still needs to give final approval for the TSMC package. The passage is never a slam dunk. May Ying-jeou, the original Taiwanese president, claimed the agreement” could lead to a major national security crisis” and have adverse effects on” Taiwan’s coming geopolitical position.”
Some Japanese citizens are debating whether the government will back down on Trump’s rhetoric or stick to the wall and maintain Taiwan’s political significance.
Taiwan is well-versed in making tough decisions, which is a positive aspect of this situation. Remember that this is a self-governing archipelago with the second-most powerful nation in the world, has formal relations with just 13 nations, and has not received a seat in the UN.
Taiwan’s very life as a self-governing body calls for a commitment to live on the edge. Thus, one might think Taiwan, using Trump’s example, to invest$ 100 billion while secretly halting the most cutting-edge chip technologies or, better still, delaying the project itself.
Even Taiwan and TSMC can play a bluff over the course of the following four years. Perhaps the Trump presidency may ignore TSMC’s compliance or ignore it.
Sometimes. However, Tawain will inevitably need to persuade Trump that it has more cards to play.
Stanley Chao is the creator of” Selling to China: A Guide for Small and Medium-Sized Businesses” and was originally professional vice-president of US intel Kingston Technology.