Under the terms of the deal Taiwanese semiconductor and technology companies would make \u201cnew, direct investments\u201d in the US totalling $250bn to expand its chip, energy and AI production and innovation capacity.<\/p>\n
The agreement marks a warming of relations between Washington and Taipei after the White House last year threatened an unprecedented 100 per cent tariff on semiconductors<\/a> unless foreign companies invested in US manufacturing.<\/p>\n The deal also sets out quotas for tariff-free imports of chips from Taiwan, where most of the world\u2019s most advanced semiconductors are made by the Taiwan Semiconductor Manufacturing Company.<\/p>\n Companies investing in manufacturing in the US would be allowed to import 2.5 times their planned semiconductor production capacity free of so-called national security tariffs over the construction period, according to the US commerce department.<\/p>\n Taiwanese companies that had already built chip manufacturing sites in the US would be able to import 1.5 times their production capacity tariff-free. <\/p>\n Washington delayed imposing levies on semiconductors when Trump forced sweeping \u201creciprocal\u201d tariffs on much of the world last year, instead launching a national security probe, known as a Section 232 investigation, in April to assess how they might best be applied.<\/p>\n TSMC, which produces about 90 per cent of the world\u2019s advanced semiconductors, has already pledged to invest $165bn in the US to build chip fabrication and processing plants, along with a research and development facility in Arizona, where it is producing semiconductors for the likes of Nvidia and Apple.<\/p>\n \u201cAs a semiconductor foundry serving customers worldwide, we welcome the prospect of robust trade agreements between the United States and Taiwan,\u201d said TMSC. <\/p>\n \u201cThe market demand for our advanced technology is very strong, we continue to invest in Taiwan and expand overseas, all the investment decisions are based on market conditions and customer demands,\u201d it added.<\/p>\n The US government said Taipei would provide credit guarantees of at least $250bn to facilitate additional investments by Taiwanese companies.<\/p>\n The Asian nation dominates global chip production after decades of industrial policy geared towards establishing the country as a critical hub for the global electronics industry. <\/p>\n The 2022 US Chips Act introduced billions of dollars in federal grants aimed at bringing chip manufacturing to the US, which entailed TSMC as well as South Korea\u2019s Samsung and SK Hynix committing to build new facilities. <\/p>\n But earlier this year, Taiwan found itself in the crosshairs of Trump\u2019s steep reciprocal tariffs, and was one of the handful of US allies unable to clinch a deal to avert the highest rates ahead of the president\u2019s August deadline.<\/p>\n The White House took a 10 per cent stake in Intel in August as the troubled chipmaker tries to re-establish itself as a leading manufacturer. <\/p>\n Recommended<\/p>\n Intel\u2019s poaching of a top TSMC executive triggered a bitter legal fight<\/a> between the two companies and an official trade secrets probe from Taiwanese authorities last year, underscoring the sensitivity of semiconductors in US-Taiwan relations.<\/p>\n![\"Close-up](\"https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/https%3A%2F%2Fimages.ft.com%2Fv3%2Fimage%2Fraw%2Fhttps%253A%252F%252Fd1e00ek4ebabms.cloudfront.net%252Fproduction%252Fea389f6d-f45c-4784-bf36-6286e70913de.jpg%3Fsource%3Dnext-article%26fit%3Dscale-down%26quality%3Dhighest%26width%3D700%26dpr%3D1?source=next&fit=scale-down&dpr=2&width=240\")
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