TSMC’s multi-billion dollar investment in the US turns out to be a mere trifle on the company’s scale

Yesterday, TSMC announced a new $100 billion investment in chip manufacturing in the U.S., causing media excitement about the American semiconductor industry and some fears for Taiwan. Today, TSMC and the Taiwanese government made it clear to the press that their relationship and shared commitment to each other remains intact, noting that future U.S. fabs will be limited to 7 percent of the company’s total output.

Image source: TSMC

Taiwan Premier Cho Jung-tai met with reporters after a joint conference between TSMC CEO C.C. Wei and U.S. President Donald Trump to announce TSMC’s plans to build a new advanced chip plant, an advanced packaging plant and an R&D center in the U.S. He dismissed speculation by some experts that TSMC’s moves were against the interests of the Taiwanese government.

Cho assured reporters that “the [Taiwanese] government and local industry maintain a constant level of communication and understanding.” Taiwan’s top government official, Michelle Lee, noted the strong alliance between Taiwan and the United States. Currently, 30 percent of Taiwan’s foreign investment is in the United States, making the United States the island nation’s largest investment destination. That’s in stark contrast to Taiwan’s 7.5 percent investment in China, which has been steadily declining in recent years. Lee and Cho believe that TSMC’s growth is Taiwan’s growth and the country’s growing appeal to its allies.

According to experts, TSMC’s advanced fabs in the U.S. will produce no more than 5-7% of the company’s total semiconductor output. At the same time, the volume of chips produced using advanced processes will be significantly smaller than chips produced using mature processes. TSMC’s customers, such as Nvidia and Apple, will still have to rely on supplies from Taiwan fabs (and the associated tariffs), and the American fabs will be heavily dependent on technical support and monitoring from TSMC’s Taiwan base.

All new TSMC investments in the U.S. will remain subject to regulation by Taiwan, which will focus on maintaining Taiwan as an integral part of the global semiconductor industry. The same goes for TSMC’s investments in fabs in Germany and Japan, which are said not to be curtailed in response to the large U.S. investments.

The American chip industry will move a little closer to self-sufficiency thanks to TSMC, although it may not be enough to make the U.S. a major semiconductor manufacturing hub.