To appease Trump, Taiwan Semiconductor announced an additional investment of $100 billion in the U.S. to build three chip factories

Taiwan Semiconductor recently announced that it will invest $100 billion in the United States to significantly expand its production capacity in the country.

According to the Financial Times, on March 3rd, U.S. local time, TSMC Chairman C.C. Wei and President Trump jointly announced that TSMC intends to increase its investment in advanced semiconductor manufacturing in the U.S. by $100 billion. Previously, TSMC was conducting a $65 billion investment project in advanced semiconductor manufacturing in Phoenix, Arizona. Based on this, TSMC's total investment amount in the U.S. is expected to reach $165 billion.

The additional $100 billion investment in the U.S. includes the construction of three new fabs, two advanced packaging facilities, and a major R&D team center. This project is the largest single foreign direct investment in U.S. history.

Trump stated: "This will create hundreds of billions of dollars in economic activity and enhance America's dominance in artificial intelligence and other fields." He added that the investment will create 20,000 to 25,000 jobs.

Strategic Considerations for TSMC in Response to Tariff Pressures

The Financial Times pointed out that TSMC's move is seen as a way to appease Trump and avoid his threats of imposing high tariffs on chip imports.

Dr. C.C. Wei stated:

“Looking back to 2020, due to President Trump's vision and support, we began our journey to establish advanced chip manufacturing in the U.S., and this vision has now come true. AI is reshaping our daily lives, and semiconductor technology is the cornerstone of new functions and applications. With the success of TSMC's first fab in Arizona, along with necessary government support and strong customer partnerships, we plan to increase our investment in U.S. semiconductor manufacturing by $100 billion, bringing our total planned investment to $165 billion.”

Last week, Apple announced that it will invest over $500 billion in the U.S. over the next four years. Trump stated that there are "many" other companies looking to announce increased production in the U.S.

For TSMC, agreeing to produce more chips in the U.S. may help avoid the tariffs of up to 50% that Trump has hinted at. The threat of tariffs would not only put cost-sharing pressure from U.S. customers on TSMC but, more importantly, Trump might revoke an agreement reached during the Biden administration, in which Washington agreed to provide over $6 billion in subsidies to TSMC's U.S. factories.

According to the Financial Times, citing informed sources, in recent weeks, Trump administration officials have made several suggestions for TSMC to significantly increase its investment in the U.S. to appease Trump. These suggestions include TSMC helping to operate Intel's factories, TSMC making equity investments in Intel, or spinning off TSMC's U.S. operations into a company owned by the U.S. government.

U.S. Secretary of Commerce Howard Lutnick stated at a press conference:

"(The company) is coming here on a large scale because they want to enter the largest market in the world and they want to avoid tariffs."

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