WASHINGTON, Jan 17, 2026, 12:56 (EST)
Taiwan moved to tamp down fears its chip and tech base will be stripped out by a new trade pact with Washington, as its flagship manufacturer TSMC pushes deeper into the United States.
“This is not an industrial relocation, but instead an extension and expansion of Taiwan’s technology industry,” Vice Premier Cheng Li-chiun said at a briefing in Washington. Bloomberg Tax
The pushback comes as the Trump administration widens its use of semiconductor tariffs and exemptions as leverage, pitching chip supply as a national-security issue and pressing allies to build more capacity in the United States. A newly announced 25% U.S. tariff on certain advanced artificial intelligence (AI) chips has sharpened the stakes for exporters across Asia.
In the Taiwan deal, Commerce Secretary Howard Lutnick said the framework amounted to $500 billion in total commitments, with $250 billion from Taiwanese companies and another $250 billion from Taiwan’s government. The scale, and the focus on semiconductors, lands as Washington tries to harden supply chains without setting off a wider rupture with Beijing.
A Commerce Department fact sheet said Taiwanese semiconductor and technology firms would make at least $250 billion in direct investments in the United States, while Taiwan would provide credit guarantees of at least $250 billion to support additional projects. The U.S. reciprocal tariff rate applied to Taiwanese goods would total no more than 15%, with a zero percent rate for items such as generic pharmaceuticals and aircraft components, it said.
The same document set out how Washington plans to use Section 232 — a U.S. law that allows duties on national-security grounds — to reward chipmakers that build in America. It said companies building new U.S. semiconductor capacity could import up to 2.5 times that planned capacity without paying Section 232 duties during the approved construction period, and 1.5 times their new U.S. production capacity after projects are completed.
The Commerce Department has said the American Institute in Taiwan and the Taipei Economic and Cultural Representative Office in the United States signed the deal. The department described it as a step toward reshoring — moving production back to the United States — in semiconductors.
For TSMC, the world’s largest contract chipmaker, the Arizona build-out is already far along. A Reuters fact box said the company has committed $165 billion in the United States and has begun volume production at its first Arizona fab — a chip factory — using 4-nanometre technology, with the second fab planned for 3-nanometre output in 2027 and a third aimed at 2-nanometre by the end of the decade; it is also seeking permits for a fourth fab and its first advanced packaging plant, a method of combining chips in one package to boost performance.
Investors have treated the pact as more fuel for equipment demand, with chipmaking suppliers and U.S.-listed names moving on the headline. Reuters reported shares of Nvidia rose more than 2%, while ASML, Lam Research, Applied Materials and Qnity gained about 4% to 6% as the deal pointed to more U.S.-based build-outs; Intel shares were modestly lower.
Taiwan has framed the agreement as a bid to lock in its role as a key AI partner rather than a handover of its crown-jewel industry. Cheng has said the plan is company-led and that firms will keep investing at home, while Economy Minister Kung Ming-hsin told reporters it was up to companies to disclose chip-related amounts; he also cited a Taiwan estimate that by 2036 the split for “advanced” chips — those using five nanometres and below — would be 80% in Taiwan and 20% in the United States. Reuters
TSMC, for its part, has paired the U.S. expansion with a larger global spending plan tied to AI demand. “We expect our business to be supported by continuous strong demand for our leading edge process technologies,” CFO Wendell Huang said, as the company outlined a 2026 capital spending plan of $52 billion to $56 billion. Chairman and CEO C.C. Wei also told analysts: “AI is real.” AP News
But the pact still has political and legal tripwires. The agreement needs ratification by Taiwan’s parliament, where opposition lawmakers have raised “hollowing out” concerns, and a U.S. Supreme Court ruling on the legality of Trump’s broadest tariffs could land as soon as this month, the Associated Press reported, quoting trade lawyer Ryan Majerus: “Wanting to solidify things with the U.S. probably played a big role here.” China, which claims democratically governed Taiwan as its territory, has condemned the deal and warned against agreements it views as carrying “sovereign connotations,” AP reported. AP News
