**Taipei**: As Taiwan navigates its strategic importance in the US-China rivalry, concerns mount over its semiconductor sector amidst Trump’s potential second term. TSMC’s $100 billion investment in the U.S. sparks both optimism and apprehension about Taiwan’s national security and geopolitical relevance.
In Taiwan, a sense of trepidation permeates as the island anticipates the evolving relationship between the United States and China under President Donald Trump’s potential second term. The political landscape is charged with concern that Taiwan might be used as leverage in a power struggle akin to the war in Ukraine. However, there exists a counter-narrative that argues Taiwan holds significant strategic importance for the U.S., benefiting from its status rather than merely being viewed as a bargaining chip.
Central to Taiwan’s position is its dominant semiconductor industry, which is responsible for the production of approximately ninety percent of the world’s advanced chips. These chips are vital for various sectors, especially artificial intelligence. In a significant gesture aimed at appeasing Trump, TSMC (Taiwan Semiconductor Manufacturing Company), the leading chip manufacturer, recently announced a colossal investment of $100 billion into the United States. This investment will fund the construction of three new factories and a development centre in Arizona. While the financial prudence of this decision has been debated, its political ramifications are seen as crucial.
During a ceremonial event attended by TSMC CEO Wei Che-chia, Trump remarked on TSMC’s forward-thinking actions, noting that the company had successfully sidestepped tariffs through its American production. Previously, the prospect of a one-hundred percent import tariff on Taiwanese chips loomed large, leading some observers to believe that Taiwan managed to avert a potentially disastrous economic measure. Wei expressed gratitude to Trump, characterising the situation as an “opportunity” presented by the U.S. President.
Nevertheless, the move has stirred apprehensions about the potential implications for Taiwan’s national security. Fu Kun-chi, leader of the opposition party KMT, raised concerns about the fate of Taiwan when TSMC, described as a “sacred mountain” for the nation, relocates part of its operations to the U.S. KMT representatives have cautioned that as TSMC increases its production in the U.S., Taiwan’s geopolitical importance may diminish, raising alarms about its vulnerability to threats from China.
In an effort to quell fears around this investment and its implications, Taiwanese President Lai Ching-te convened a press conference with TSMC’s CEO to underscore the cooperation between Taiwan and the U.S., branding it a “historical moment.” Lai affirmed that both Taiwan and TSMC would derive mutual benefits from the deal.
The agreement, however, has been scrutinised for a lack of explicit security guarantees for Taiwan from the U.S. While Trump highlighted the significance of TSMC’s investments in American soil, he did not frame these actions as protective measures for Taiwan in the event of conflict with China. Historical perspectives suggest that Trump has not been particularly inclined towards Taiwan, as his previous national security advisor John Bolton recalled a time when Trump starkly illustrated Taiwan’s status in comparison to China.
Despite these dynamics, Taiwanese officials are fostering an optimistic outlook on the prospect for a U.S. strategy that seeks to contain China, with Taiwan playing a pivotal role in this approach. Taiwan’s Foreign Minister, Lin Chia-lung, remarked that Trump’s focus could be on countering China’s influence, which might allow for shared interests to emerge. Simultaneously, the Taiwanese government has been vocal about the need for a distinct separation between the geopolitical considerations inherent to Taiwan and the situation in Ukraine, thus momentarily sidestepping concerns regarding Trump’s outreach to Russia.
In a bid to mitigate trade concerns stemming from a perceived surplus with the U.S., Taiwan is exploring the possibility of increasing its imports of American liquefied natural gas. President Lai has previously announced intentions to boost Taiwan’s defence spending from the current figure of 2.45 percent of GDP to three percent. Nonetheless, this is still significantly less than the ten percent of GDP that Trump had suggested.
Taiwan is concurrently negotiating further military purchases from the U.S., amounting to approximately $10 billion, which include systems such as HIMARS rocket launchers. However, there have been concerns regarding delays in arms deliveries, reflecting an ongoing struggle as Taiwan seeks to secure its defensive capabilities amidst rising tensions with Beijing.
Source: Noah Wire Services
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