Taiwan to Invest $500 Billion in US Chipmaking

The US and Taiwan signed a trade deal that should restore the former’s leadership in semiconductor manufacturing. The US would also lower tariffs previously imposed by its President Donald Trump.

In a fact sheet, the US Department of Commerce (DoC) explained that the agreement involves Taiwan-based chip and technology companies investing $250 billion to expand advanced semiconductor, energy, and AI operations in the US. Taiwan’s government agreed to guarantee another $250 billion to drive further investments by domestic companies.

In return, the US reciprocal tariff rate applied to Taiwanese goods was capped at 15%, down from 20%. The US also agreed to a 0% reciprocal tariff for generic pharmaceuticals and their ingredients, aircraft components, and some natural resources. Future tariffs under the Section 232 framework would allow exceptions for Taiwan-based companies building chips in the US, which may import up to two-and-a-half times the amount of planned capacity they are building without paying.

US Secretary of Commerce Howard Lutnick said TSMC bought hundreds of acres of additional land in Arizona, where it is investing around $65 billion in three greenfield fabrication facilities. The DoC stated the US’s share of global wafer fabrication declined from 37% in 1990 to less than 10% in 2024. It blamed foreign industrial policies that distort global trade flows for resulting in most production now taking place in East Asia.