It’s been a whirlwind of news on the tariff front and Taiwan has avoided tariffs for now. But the timing of a $100 billion commitment by TSMC to build chip manufacturing plants in the U.S. may have helped.
Taiwan Semiconductor Manufacturing Co. is the biggest chipmaker in the world, but most of its chips are made in Taiwan. Donald Trump announced in a press event on Monday that TSMC would invest at least $100 billion in chip manufacturing plants in the U.S. acroos the next four years.
TSMC is already building new factories in Arizona based on a prior $65 billion pledge, and now the extra cash will fund the construction of more factories in Arizona, said C. C. Wei, chairman and CEO of TSMC, during the briefing. All of it will support the production of AI chips, he said.
“I think it already helped Taiwan avoid tariffs. I have no doubt that there was a political influence in that decision,” said Jim McGregor, a chip analyst at Tirias Research, in a message to GamesBeat.
TSMC has also received $6.6 billion in grants from the Chips and Science Act, a bipartisan agreement reached during the Biden administration to boost domestic semiconductor production. Now TSMC is planning to invest $165 billion in chip factories in the U.S.
But the big question is how many jobs it can create. TSMC has had to bring a lot of its engineers over from Taiwan to get the new chips up to speed in terms of quality. The U.S. was the birthplace of the semiconductor industry, but it doesn’t necessarily have the engineering talent anymore as so much production has moved offshore.
“I believe that TSMC was faced with 50-100% tariffs and had to make a choice between that and making increased US investments,” said Patrick Moorhead, an analyst at Moor Insights & Strategy. “While I don’t think the tariffs will be zero, they will be much lower, and I also don’t think that TSMC will spend as much incrementally as is implied. “
The new investment brings TSMC’s total investments in the U.S. chip industry to around $165 billion, Trump said. Intel has also received more than $2 billion via the Chips and Science Act and it has pledged to invest heavily in U.S. manufacturing. But Intel has had a hard time in recent years being competitive with TSMC.
Trump had threatened to bring tariffs against Taiwan earlier, but he held back when he announced tariffs on China, Mexico and Canada. Apple has also said it will invest more than $500 billion in U.S. manufacturing for its products.
TSMC did not give a timeframe for the newly announced investments, but it said it would add 40,000 construction jobs over the next four years. Companies like Nvidia, AMD and Qualcomm are among TSMC’s big customers.
The Consumer Technology Association (CTA) said that tariffs will hurt American consumers, reducing their purchasing power by $90 billion to $143 billion. The Entertainment Software Association also voiced its concern about tariffs. The CTA said during CES that the proposed tariffs could increase prices on laptops and tablets by 46%, game consoles by 40%, and smartphones by 26%.
