In a dramatic statement likely to stir both diplomatic and economic tensions, former US President Donald Trump declared on Tuesday that Taiwan Semiconductor Manufacturing Company (TSMC) must build its production facilities on American soil — or face a “big tax” of up to 100 per cent. His comments were made during a speech at a Republican National Congressional Committee event held in Washington, D.C.
“TSMC, I gave them no money… all I did was say, if you don’t build your plant here, you’re going to pay a big tax,” Trump said. The statement was a direct contrast to the current Biden administration’s approach, which provided a $6.6 billion federal grant to support TSMC’s expansion in the United States. Trump, known for his protectionist rhetoric and America-first economic stance, said semiconductor companies “don’t need the money“, implying the funds were an unnecessary handout.
TSMC’s investment pledge
Despite Trump’s aggressive tone, TSMC had already announced in March 2025 that it intends to invest $100 billion over the next four years to construct advanced chip-making facilities in the United States, specifically in Phoenix, Arizona. The investment is aimed at addressing the surging global demand for semiconductors, especially in fields like AI, automotive technologies, and next-generation consumer electronics.
However, the chipmaker’s expansion abroad has sparked anxiety in Taiwan, where semiconductors are not just a major export, but a cornerstone of national security. In response to growing public concern, President Lai Ching-te reassured citizens that TSMC’s decision was driven purely by strategic business considerations, and that the government had not been pressured by the US into allowing the move.
“TSMC’s global expansion is a matter of long-term competitiveness,” Lai said in a recent press statement, urging citizens not to view the move as a national loss but as part of a necessary global strategy.
Looming $1 billion fine?
Trump’s tax warning comes just hours after Reuters reported that TSMC may be facing a substantial fine — possibly exceeding $1 billion — in connection with a US export control investigation. The probe centres on concerns that TSMC-manufactured chips may have ended up in Chinese tech giant Huawei’s Ascend 910B AI processor, in violation of US trade sanctions.
The investigation, according to sources, is specifically focused on TSMC’s previous work with China-based Sophgo, a firm linked to Huawei. The US Department of Commerce had launched the inquiry in 2024, following reports that one of TSMC’s chips had been integrated into Huawei’s banned high-performance AI systems — despite Washington’s strict export restrictions against the company over allegations of sanctions evasion and intellectual property theft.
While TSMC has denied any wrongdoing and insists it adheres to international export regulations, the threat of a billion-dollar fine adds a new layer of complexity to the company’s operations and its relationship with both Beijing and Washington.
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Global stakes in the chip war
The political row comes amid a wider global semiconductor race, with the United States, China, and the European Union all scrambling to shore up domestic production of the high-tech components vital for everything from smartphones to missile systems.
Trump’s latest remarks are likely to ratchet up pressure on foreign chipmakers to align more closely with American industrial policy. For TSMC, which already dominates the global foundry market, balancing the strategic demands of major geopolitical powers may become increasingly difficult.
As Washington and Beijing continue their rivalry in trade, tech, and defence, TSMC finds itself on the frontline of a silicon cold war, where every investment decision carries profound political weight. Whether Trump’s proposed tariffs are ever implemented remains to be seen, but the message is clear: the chips are down, and the stakes are higher than ever.
