A surprise announcement unfolded at the White House, presided over by President Donald Trump, unveiling a massive $100 billion investment from Taiwan Semiconductor Manufacturing Company (TSMC), which Trump described as the “world’s most powerful company.” This revelation, initially seen as a triumph, quickly took a darker turn across the globe, particularly in Taiwan, where it raised serious concerns about the future of the island’s semiconductor industry.
TSMC, the giant that produces more than 90% of the world’s advanced microchips, has long been a cornerstone of Taiwan’s economy. The shock announcement has reignited fears that Taiwan might lose control over its prized semiconductor sector, which powers everything from smartphones to artificial intelligence and weapons. Many in Taiwan fear that increasing pressure from the U.S. could lead to its dependence on American control, particularly as tensions with China continue to escalate.
Former Taiwanese President Ma Ying-jeou, a member of the opposition Kuomintang (KMT), didn’t hesitate to accuse the ruling Democratic Progressive Party (DPP) of “selling TSMC” to Trump as a form of “protection fee.” In a Facebook post on March 4, Ma referred to this as a “major national security crisis” that could have severe consequences for Taiwan’s geopolitical position, cross-strait relations with China, and public confidence.
In response to these fears, Taiwan’s President Lai Ching-te appeared alongside TSMC CEO CC Wei, seeking to reassure the public that the company’s US investment would not harm Taiwan’s core operations and plans for expansion. TSMC’s extensive global reach and technological dominance serve as Taiwan’s so-called “silicon shield,” a form of protection against potential Chinese aggression. The island’s role in the global semiconductor industry has been a deterrent to China’s territorial ambitions, but now that balance is seen as shifting due to the growing influence of the U.S.
China has long claimed Taiwan as its territory, though it has never controlled the island, and has vowed to reunify Taiwan with the mainland, by force if necessary. This looming threat has made Taiwan heavily reliant on the United States for military and political support. Under the Taiwan Relations Act, the U.S. is legally bound to provide Taiwan with the means to defend itself from potential Chinese aggression. However, recent rhetoric from Trump regarding Taiwan’s “theft” of the U.S. semiconductor industry, along with demands for Taiwan to pay the U.S. for protection, has raised alarms about the future of U.S.-Taiwan relations.
The phrase “Ukraine today, Taiwan tomorrow” has become increasingly popular among Taiwanese, especially as they observe Trump’s approach to Ukraine, where he has aligned more closely with Russia while distancing the U.S. from traditional European allies. This parallel has led many in Taiwan to worry that they might face a similar fate, where their security and sovereignty are compromised for political or economic leverage.
Trump’s recent suspension of military aid to Ukraine, following a tense exchange between him, Vice President JD Vance, and Ukrainian President Volodymyr Zelensky, raised further concerns in Taiwan about the reliability of U.S. support. Although aid was later reinstated after Ukraine agreed to a 30-day ceasefire, the incident added to the growing unease about the future of U.S. commitments to both Ukraine and Taiwan.
For Taiwanese citizens like Tammy Chao, a retiree who spoke with CNN, the TSMC deal feels like a potential betrayal. Chao likened Trump’s actions to treating Taiwan as a bargaining chip, akin to his dealings with Ukraine. She warned that, like Ukraine, Taiwan could be left without any leverage as Trump’s dealings continue to shift.
However, not everyone in Taiwan shares this view. Fred Lin, a finance professional, expressed a more pragmatic perspective, stating that the $100 billion investment by TSMC is simply a reflection of the realities of international politics. Lin suggested that paying protection fees, while not ideal, is a common practice in global diplomacy and reflects the current geopolitical dynamics.
TSMC’s decision to invest in the U.S. comes at a time when the company is under immense pressure to meet the needs of American customers like Apple, Nvidia, AMD, and Qualcomm. These companies are seeking to reduce supply chain risks by bringing production closer to home. Despite concerns, TSMC’s CEO emphasized that the company’s core research and development efforts would remain in Taiwan, and the next-generation chip-making technology would continue to be developed there.
While the $100 billion investment is a significant move, semiconductor analysts believe it may be more of a strategic necessity than a voluntary decision. TF International Securities analyst Ming-Chi Kuo praised TSMC for its agility in responding to the pressures, but also warned that the lack of detailed plans leaves room for uncertainty in future negotiations with the Trump administration.
This investment is part of a broader trend where foreign businesses are increasingly committing large sums to the U.S. TSMC stands out as one of the first major foreign firms to make such a large commitment. Trump’s administration has consistently used tariffs as leverage in its trade negotiations, and many other companies, like Apple, Oracle, and SoftBank, have made similar pledges to expand operations in the U.S.
However, experts like economist Chang-Tai Hsieh of the University of Chicago warn that the pressure on companies to comply with U.S. demands could lead to long-term consequences. Hsieh cautioned that once companies like TSMC agree to such “blackmail,” there could be no end to the demands for further concessions.
In the broader context, the security of Taiwan remains a complex issue influenced by multiple factors beyond just its semiconductor industry. Researchers like Min-yen Chiang, a nonresident fellow at the Research Institute for Democracy, Society, and Emerging Technology in Taipei, remind us that Taiwan’s security is also shaped by China’s broader geopolitical ambitions, Taiwan’s strategic location, and the historical precedent of U.S. intervention in the region. He referenced the U.S. intervention during the Korean War as a key moment in maintaining stability in the Asia-Pacific region, even though Taiwan had no semiconductor industry at that time.
As Taiwan navigates these tumultuous waters, President Lai’s reassurances that Taiwan is not facing undue pressure from Washington may provide some comfort. Still, the growing influence of the U.S. in Taiwan’s semiconductor industry, coupled with rising tensions with China, presents an uncertain future for the island’s sovereignty and security.
This situation highlights the ongoing challenges faced by Taiwan as it grapples with the complex intersection of international politics, trade, and security in the context of its semiconductor industry. The $100 billion investment by TSMC may be seen as a strategic necessity, but for many in Taiwan, it represents a larger struggle for autonomy in a rapidly changing geopolitical landscape.#
- Source CNN
