David Sacks and Adam Segal
On Monday, March 3, U.S. President Donald Trump announced that Taiwan Semiconductor Manufacturing Company (TSMC) would invest an additional $100 billion to expand its advanced semiconductor manufacturing operations in Arizona. This money will be put toward three new fabrication plants (or fabs), two advanced packaging facilities, and a major research and design (R&D) center. TSMC touted this as the largest single foreign direct investment in U.S. history, bringing its total investment to $165 billion and doubling its planned manufacturing plants from three to six.
President Trump’s focus on semiconductors, and in particular Taiwan’s outsized role in the production of these tiny chips that enable modern life, is not new. He has repeatedly accused Taiwan, which produces around 90 percent of the world’s most advanced semiconductors, of stealing the U.S. chip industry. Trump has threatened to impose tariffs between 25 and 100 percent on all chips entering the United States to force companies to establish a manufacturing presence in the country.
Trump is not alone in worrying about U.S. overreliance on chips made in Taiwan, which are not only needed for smartphones and washing machines but also for most modern weapons systems. In 2022, President Joe Biden signed into law the CHIPS and Science Act, which was intended to incentivize companies to build fabs in the United States. TSMC received $6.6 billion in direct funding and $5 billion in low-cost loans through the CHIPS Act to build a foundry in Arizona. Trump, though, has criticized this as a “ridiculous program,” stating, “we don’t want to give them billions of dollars.”
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