Taiwan signs deal to invest $250 ‌billion into US tech industry and slash tariffs on its exports

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Signing with silicon.

Taiwan Semiconductor Manufacturing Co. wafers
(Image credit: Taiwan Semiconductor Manufacturing Co.)

After many months of ups and downs, Taiwan's vice premier Cheng Li-chiun has announced a deal that should slash tariffs on the country's exports to the US. In turn, Taiwan will boost its investment in the US tech industry, particularly when it comes to the production of silicon for AI.

U.S. commerce secretary Howard Lutnick said that this deal will see Taiwan putting $250 ‌billion towards not only AI or semiconductor production, but energy as well (via Reuters). This figure includes $100 billion from chipmaker TSMC, which it already committed to investing last year as part of a long term plan to build new fabs in the US.

Both TSMC and the Taiwanese government have also committed to investing more in the future, with the country committing to guarantee an additional $250 billion in credit. The hope is that all this money from Taiwan will encourage reciprocal investment in the country from the US. Vice Premier Cheng said, "In this negotiation, we promoted two-way Taiwan–U.S. high-tech investment, hoping that in the future we can become close AI strategic partners."

The outside of TSMC Arizona, showing the desert and the mountains in the distance next to the TSMC logo

(Image credit: TSMC)

However, it's worth noting that U.S. Commerce Secretary Howard Lutnick told CNBC that the Trump administration's goal was to bring 40% of Taiwan’s semiconductor supply chain to the US—and if chipmakers such as TSMC weren't going to build on American soil, then tariffs would be levied at 100%. That…doesn't seem like much of a choice to me.

Taiwan's economy minister Kung Ming-hsin disagreed with the '40%' figure, saying that he was uncertain how it was calculated, and instead, Taiwan's expectation was that the production split between the two countries would be closer to 80/20 by 2036. This will likely include advanced chips of five nanometres and ‍below. Taiwan has previously rejected a 50/50 production split proposal.

I'd be remiss if I didn't also mention China, with which both Taiwan and the US have their own distinct, complicated relationship. China has previously criticised Taiwan for its earlier trade dealings, expressing concerns that the government wanted to give away TSMC as a 'souvenir' to the US.

More recently and most memorably, the Trump administration levied a 100% China tariff before agreeing to a one-year trade truce in October last year. With that in mind—not to mention how Beijing claims Taiwan's territory as its own, while Taiwan itself rejects these claims of sovereignty—Taiwan's bid to forge a stronger relationship with the US independently of the People's Republic is likely to irritate China.

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Jess Kinghorn
Jess Kinghorn
Hardware Writer

Jess has been writing about games for over ten years, spending the last seven working on print publications PLAY and Official PlayStation Magazine. When she’s not writing about all things hardware here, she’s getting cosy with a horror classic, ranting about a cult hit to a captive audience, or tinkering with some tabletop nonsense.

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