by Brian Hioe

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English
Photo Credit: Gage Skidmore/WikiCommons/CC BY-SA 2.0

IN COMMENTS last month, US President Donald Trump hit out at Taiwan, once again accusing Taiwan of stealing the American semiconductor industry. This time around, however, Trump went on to state that he would place tariffs on Taiwan of up to 100%, with a focus on semiconductor manufacturing giant TSMC.

Trump stated that this would bring semiconductor manufacturing jobs back to the US. Trump also hit out at TSMC’s Arizona fab, which took shape under the Biden administration. Specifically, Trump criticized the CHIPS Act and the billions of subsidies it provided for TSMC, stating that if a new fab is built, it will be at TSMC’s expense. Trump suggested that the CHIPS Act was a mistake by which the Biden administration provided TSMC with more money than it knew about to spend.

Trump’s comments take place shortly after his administration placed a 90-day freeze on foreign aid, which also affected aid to Taiwan.

While Taiwan had previously viewed the presence of China hawks in the Trump administration it is familiar with as reassuring, Trump’s comments indicate that the US may continue with extractive rhetoric toward Taiwan and other allies.

Apart from comments framing TSMC as stealing American jobs, Trump previously caused concerns in Taiwan over calls for Taiwan to pay the US for its defense. Trump’s comments, then, are likely to be used for political ammunition by the KMT, which has seized upon the Trump administration to emphasize the unreliability of the US.

It is unclear as to what moves are likely to pacify the Trump administration. For one, the optics of TSMC’s Arizona fab as fulfilling Trump’s desire for semiconductor manufacturing jobs to return to the US are apparently not enough. Indeed, it is possible that Trump wishes to lash out at the Arizona fab, as well as the CHIPS Act, because he sees them as achievements of the Biden administration.

TSMC’s Arizona fab under construction. Photo credit: TrickHunter/WikiCommons/CC BY-SA 4.0

Still, the US is dependent on TSMC for its own supply chains. US companies such as Intel also received large subsidies from the CHIPS Act and were still unable to beat TSMC at its own game. In this light, it is self-apparent that Trump does not understand how advanced semiconductors work and that TSMC cannot be replaced overnight through increasing tariffs on TSMC chips–as TSMC produces 65% of global supply and 90% of advanced chips, US companies may hurt most of all from Trump’s tariffs. Yet what proves a danger for Taiwan is not only that Trump may not understand this, but would come to blame TSMC for any economic woes experienced by the US.

At present, US markets are unnerved by the successes of Chinese AI DeepSeek, which performs strongly despite not being as resource-intensive as other AI products. In this sense, the stock of US chip giants such as Nvidia, which was expected to provide chips for AIs, has taken a hit. Nvidia previously aimed to scale up its Taiwan presence, with suggestions that it would build a Taiwan headquarters.

The US has signaled its desire to focus on the field of AI immediately prior to the DeepSeek reveal, with Trump announcing 500 billion USD in investment for the AI industry. Ironically, this takes place at a time when the KMT has pushed for substantial cuts to Taiwan’s budget, including funds that would have gone to positioning Taiwan as a crucial node in the global supply chain for AI.

It is unclear how Taiwan will position itself, going forward then. Taiwan is strong when it comes to hardware, not necessarily software, and so the rise of less resource-intensive AI may be a risk for Taiwan in decreasing the reliance of the world on Taiwan for chips used for AI. At the same time, Trump is, if anything, unpredictable. Consequently, it’s possible that Trump will demand more from Taiwan–and it is a question as to how Taiwan will try to keep him happy. Much uncertainty seems ahead, then.

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