Semiconductor chips made by Taiwan Semiconductor Manufacturing Company (TSMC)(AP Photo)
The U.S. Commerce Department announced a massive U.S.-Taiwan chips deal on Jan. 15, which is expected to go a long way in reshoring American semiconductor manufacturing.
It includes a minimum of $250 billion in direct investment from Taiwanese tech enterprises in chips, energy, and artificial intelligence innovation in the United States, as well as credit guarantees by the Taiwanese government for another $250 billion in other Taiwanese investments to expand the chip supply chain in the United States.
Taiwan will also see U.S. investment in its own tech sectors and will benefit from tariff rates capped at 15 percent, down from 20 percent, and certain tariff exemptions as part of the deal.
The zero percent tariffs will apply to generic pharmaceuticals and their generic ingredients, aircraft components, unavailable natural resources, and certain amounts of Taiwanese semiconductors imported by producers that are building in the United States. Taiwanese chips may otherwise be subject to tariffs of 100 percent, according to Commerce Secretary Howard Lutnick.
The deal was signed by the American Institute in Taiwan and the Taipei Economic and Cultural Representative Office in the United States.
It is part of the Commerce Department’s “whole-of-government effort to revitalize semiconductor manufacturing” in the United States, which stands around 10 percent today, with great reliance on East Asian manufacturing, according to the department.
“We’re going to bring it all over so we become self-sufficient in the capacity of building semiconductors,” he said.
Lutnick said the United States has already given Taiwan a $100 billion credit in the deal because TSMC made an equivalent investment in the United States in 2025, but he expects a “huge, bigger” investment from the company that could see it “possibly doubling in size in America.”
He said the deal will result in wide-ranging investments beyond that because of the sprawling nature of the supply chain.
“All those bits and parts, they have to come here, so we’re going to have hundreds of companies come here. We’re going to build giant semiconductor industrial parks in America, and we’re going to bring semiconductors home to America,” he said.
Lutnick added that Taiwan wants to “keep our president happy,” given the threats posed to the democratically self-governed island from China on the other side of the strait.
“We need semiconductors. For our national security, we need them built in America. We can’t rely on a country that’s 9,000 miles away from us to deliver us these kind of fundamental national security products,” he said.
Rep. Chris Smith (R-N.J.), co-chair of the Congressional-Executive Commission on China, commended the deal in a statement.
“At a critical moment when the United States and communist China are locked in a tight race for technological dominance, Taiwan’s impressive investment in U.S. technological development makes a world of difference,” he said.
