Recently, after the official agreement on the Taiwan-US reciprocal tariffs at a 15% rate, amidst cheers of breakthrough and benefits, negative voices such as “Taiwan will move money to the US” and “Taiwan will lose its sacred mountain” have emerged on the island of Taiwan.
However, experts have pointed out that TSMC’s establishment of a factory in the US is to accommodate its customers, not to align with either the Republican or Democratic party. TSMC’s expansion overseas is aimed at continuous growth, transitioning from being a guardian of the nation to a global “digital hub,” forming a highly interest-bound “strategic symbiosis” with the US.
Discussions surrounding the Taiwan-US tariff negotiations have raised concerns, including speculation about whether the government’s credit guarantee could undermine Taiwan’s finances and squeeze out investments from small and medium-sized enterprises. Lian Xianming, the director of the Chung-Hua Institution for Economic Research, expressed his views in a Facebook post on the 19th. He stated that the $250 billion credit guarantee provided by the government will not utilize existing credit guarantee funds, ensuring that it won’t hinder the usage of credit guarantees by domestic small and medium-sized enterprises, eliminating concerns about difficulties faced by these enterprises investing in Taiwan.
Despite this, some in the Blue camp have pointed out that obtaining the $250 billion credit guarantee from the Taiwan government would require obtaining loans from Taiwan’s state-owned banks, essentially resulting in moving money from Taiwan to the US.
In response to this, Liu Peizhen, the director of the Taiwan Institute of Economic Research, stated that regardless of whether the Taiwanese government provides a $250 billion credit guarantee or all Taiwanese tech industries (including energy, AI, and semiconductor chains) accumulate $250 billion in direct investments in the US, it’s not a one-time expenditure but a multi-year endeavor.
Liu Peizhen mentioned that even though the costs of establishing and operating a factory in the US may be higher for TSMC, the latest financial report for 2026 shows that despite this, with the 2-nanometer leading pricing and tariff exemptions under Section 232, the gross margin in the first quarter can still remain stable at 63%–65%. The mid-to-long-term gross margin level has been raised from the previous estimate of 53% to 56%, demonstrating TSMC’s confidence in the future, even with the vast overseas operations.
Xue Zongzhi, a former TSMC procurement manager who is currently the chairman and CEO of a technology company, stated during an interview that TSMC will continue to invest in building factories in the US in the coming years, regardless of whether it’s under Trump or any future administration. He emphasized that TSMC’s decision to move its plants to the US is not to align with the US government but to cater to its customers like Apple, Qualcomm, and NVIDIA, all of whom will continue to collaborate with TSMC for the next 20 years, irrespective of whether it’s a Democratic or Republican administration. Xue Zongzhi added, “If TSMC had to follow US political whims every four years, TSMC would be driven insane.”
Regarding some sensational headlines in Taiwan’s media claiming “TSMC has been sold,” Xue Zongzhi pointed out that Japan has many Japan towns worldwide, including factories built by Japanese in the US. No one accuses Japan of selling its industry to the US. He also highlighted that Foxconn’s biggest production base is not in Taiwan, yet no one blames Taiwan for selling Foxconn, but now criticism arises when the Taiwan government’s involvement in TSMC’s US expansion.
Political and economic commentator Wu Jialong explained that Taiwan primarily exchanges its semiconductor production capacity investment to negotiate tariff reductions with the US. The US expects Taiwan to bring the entire industry chain to the US, creating what is known as the “Taiwan model,” resembling the establishment of an “Hsinchu Science Park” in the US.
Wu Jialong elaborated that if only one TSMC plant was established in the past, many processes still had to be performed back in Taiwan for packaging and testing, resulting in inefficiencies. Therefore, Taiwan’s supply chain has been debating for years whether to move completely. The key factor lies in scale. Even though setting up three plants may not have been viable for the supply chain previously, now with 1 plant in Taiwan and 5 overseas, the supply chain can balance effectively.
According to the latest financial data, TSMC’s performance in the fourth quarter of 2025 was outstanding, with a consolidated revenue of NT$1.4609 trillion, a quarterly growth of 5.7%, an annual increase of 20.5%, and a net profit of approximately NT$505.74 billion, with an EPS of 19.5 in a single quarter, setting new historical records for revenue and profit.
Wu Jialong noted that TSMC’s recent corporate presentation demonstrated strong fourth-quarter performance, indicating TSMC’s confidence in agreeing to double its production capacity in the US. Without achieving this milestone, Taiwan’s negotiation representatives would find it challenging to make commitments.
Recently, TSMC CFO Huang Renzhao stated in an interview with CNBC that TSMC’s first wafer plant in Arizona proves “we can replicate excellent manufacturing capabilities in the US,” emphasizing that TSMC’s most advanced technologies will continue to be developed and manufactured in Taiwan.
During TSMC’s corporate presentation on the 16th, it was also mentioned that 75% of the new year’s factory budget will be spent in Taiwan, with the remaining 25% shared between the US, Japan, and Germany.
However, local television stations and pro-government media in Taiwan have criticized the reciprocal tariff agreement with headlines claiming “TSMC is relocating” and “emptying Taiwan’s economy.”
In response, Wu Jialong stated that Taiwan is frantically expanding, almost depleting all industrial land in Taiwan. Land for building factories has become scarce, resulting in a strain on Taiwan’s industrial land, water, power, and talent resources. Taiwan is already at full capacity and must establish factories overseas and build production capacity to strengthen and not deplete Taiwan’s economy.
Regarding TSMC’s increased investment in the US, the Taiwanese Premier had two requirements in March last year: maintaining Taiwan’s leading technological position and ensuring that no matter how the layout is designed, it remains rooted in Taiwan, following the principle of “N+1” or “Taiwan+1” to prevent Taiwan’s industry from becoming hollow.
Liu Peizhen explained that “N+1” means Taiwan’s indigenous process progress always remains at the forefront of mass production, while the US lags behind by a generation. Even as the Phoenix factory expands in the US, Taiwan remains the core base for 2-nanometer, 1.4-nanometer, and the most critical research and development (R&D).
“Expectations are for TSMC’s future investments in the US to transform the guardian’s sacred mountain from a Taiwanese mountain into a global ‘digital hub,’ leading the entire supply chain ‘eastward’ to establish global service capabilities, ensuring Taiwan’s chain becomes an irreplaceable international standard,” Liu Peizhen said.
Xue Zongzhi added that if all of TSMC’s factories were located in Taiwan, there would be no space left unless Yushan Mountain is moved. Furthermore, TSMC now consumes nearly 10% of Taiwan’s entire electricity consumption, and the strained power supply in Taiwan will be unsustainable in the future.
Following the finalization of the Taiwan-US reciprocal tariff negotiation, US Secretary of Commerce Lucan Nickle publicly claimed that during Trump’s term, “40% of Taiwan’s semiconductor production capacity will move to the US,” causing significant concern within Taiwan. The current monopoly position of Taiwan in the global semiconductor industry acts as a “silicon shield” to prevent a possible military invasion from mainland China. With TSMC relocating production facilities to the US, questions arise about whether Taiwan’s “silicon shield” will diminish, and if the US will no longer rely on Taiwan.
A TSMC executive remarked that it took 5 years for TSMC to commence mass production in its first US factory, with the current revenue contribution being less than 2%. Achieving Nickle’s stated goal of transferring 40% of semiconductor production capacity to the US within Trump’s remaining 3-year term is practically unfeasible. It’s confirmed that TSMC will continue to expand production in Hsinchu, Taichung, and Kaohsiung, but the production ratio in the US will increase gradually, although hitting the 40% target would require an extended period.
TSMC Chairman Wei Zhejia acknowledged during a recent corporate presentation that the high construction costs and increased labor and depreciation expenses in the US facility have led to a significantly lower gross margin of around 8%, compared to the 62% margin in Taiwan.
Liu Peizhen emphasized that the semiconductor industry heavily relies on “talent aggregation” and “ecological efficiency,” with Taiwan possessing decades of experience in supply chain integration and a dense engineer resource base. This complexity cannot be replaced by merely constructing a few factories. The US currently aims for “resilient backup” instead of fully decoupling; the relationship between the two countries is shifting towards a highly interest-bound “strategic symbiosis.”
In response, Xue Zongzhi emphasized that Taiwan’s strategic location in the first island chain is irreplaceable, considering that semiconductors are an asset, along with the increase in AI capabilities.
Facing the two behemoths of the US and China, Taiwan holds a crucial position and must continue to become increasingly indispensable and irreplaceable.