Taiwanese chip companies are to invest at least $250 billion in the United States as part of a trade agreement.
In addition, Taiwan will provide credit guarantees for at least another $250 billion in investments, the US Treasury Department said on Thursday. Under the deal, which was concluded after months of negotiations, US tariffs on goods from Taiwan will drop to 15% from 20%.
The chip investments are of strategic importance for the US. The world's most advanced semiconductors – for both smartphones and AI data centres – are produced almost exclusively by Taiwanese chip manufacturer TSMC.
In the West, there is great concern about a possible conflict between China and Taiwan, which could affect strategically important TSMC plants on the island and lead to a chip supply crisis.
That is why attempts have been made for years to produce more chips in the US and Europe. So far, progress has been rather slow. Yet, chip shortages due to a surge in demand at the beginning of the coronavirus pandemic were a wake-up call for many countries.
US Commerce Secretary Howard Lutnick said that the trade agreement would help "bring that whole supply chain to America."
"So, we're going to bring it all over so we become self-sufficient in the capacity of building semiconductors," he added.
Taiwan's President Lai Ching-te said that, under the agreement, the US also committed to increase investment in Taiwan across key sectors, including semiconductors, artificial intelligence and biomedical technology.
Lai added that the outcome of these negotiations will foster a coordinated, mutually beneficial economic partnership between Taiwan and the US, supporting Taiwanese industries to "strengthen their domestic presence while expanding globally and reaching international markets."
The chip industry once had its cradle in Silicon Valley in the US – but over the decades it has increasingly migrated to Asia. Bringing semiconductor production back to the West is also difficult because large parts of the industry's supply chain are now also anchored in Asia.
