Taiwan and U.S. strike $500 billion trade deal to build strategic AI partnership and chip dominance

Taiwan VP declares that U.S. deal won't erode island's chip industry -- says Section 232 tariffs won't apply, 'the U.S. will grant Taiwan the most favorable treatment: zero tariffs within the quota'

The trade deal is a win-win for both Taiwan and the U.S. if Taiwanese chips get preferential treatment even outside the quota. Taiwan Vice Premier Cheng Li-chiun said that the recent U.S.-Taiwan trade deal will not erode the island's chip industry, often considered as its "silicon shield" against potential aggression from China, which claims the island as its own, according to Reuters. The trade deal between the two partners requires Taiwanese companies to invest $250 billion in semiconductor manufacturing, energy production and distribution, and artificial intelligence research, development, and operations. Aside from that, the Taiwanese government will offer $250 billion in credit guarantees to its companies, allowing them to build or expand their presence in the United States. The massive investment by Taiwanese companies in American research and manufacturing facilities has some people concerned that the island will lose its edge when it comes to advanced semiconductors. However, it has taken steps to ensure that its most advanced technologies remain on the island, while also refusing a proposal to move half of U.S.-bound chip production on American shores. "This is not supply-chain relocation; rather, it is support for Taiwan's high-tech industries to extend their strength abroad -- through addition, and even multiplication -- to expand a strong international footprint in the United States," Cheng told reporters. In exchange for the $500 billion investment, the U.S. will apply zero tariffs on chips made in Taiwan that are within 2.5 times of a company's current Stateside manufacturing capacity while they're building their facilities. Once construction is completed, this limit will fall to just 1.5 times, but still without import taxes. As for chips that exceed the limit, Taiwan expects preferential treatment, meaning it will likely not get hit with the massive 300% tariff that U.S. President Donald Trump is considering putting on semiconductors. "As for what the actual Section 232 semiconductor tariff will be in the future, (U.S. Commerce) Secretary Lutnick recently mentioned a possible rate of 100%, but this remains undecided. Regardless, under any future tariff scenario, we have ensured that the U.S. will grant Taiwan the most favorable treatment: zero tariffs within the quota and preferential treatment even outside the quota," the Vice Premier said. She also added, "In the past, we said, 'Taiwan can help.' We hope in the future it will be 'Taiwan-U.S. can lead,' with the two sides joining forces, and under the wave of AI, working together to build a high-tech supply chain for the democratic camp. This is our strategic objective."

Taiwan aims to be strategic AI partner with US under tariff deal

The Trump administration has pushed Taiwan, a major semiconductor producer, to invest more in the U.S., specifically in making the chips that are powering the trend towards AI. Taiwan aims to become a close strategic artificial intelligence partner with the United States thanks to a ⁠deal to reduce tariffs and boost Taiwanese investment in the country, Taiwan Vice Premier Cheng Li-chiun said on Friday. The Trump administration has pushed Taiwan, a major semiconductor producer, to invest more in the U.S., specifically in making the chips that are powering the trend towards AI. The trade deal clinched on Thursday cuts tariffs on many of the semiconductor powerhouse's exports, and directs new investments in the U.S. technology industry. Taiwanese companies will invest $250 billion to increase production of semiconductors, energy and artificial intelligence in the U.S. That includes $100 billion already committed by chipmaker TSMC in 2025, with more to come, according to U.S. Commerce Secretary Howard Lutnick. Taiwan will also guarantee an additional $250 billion in credit to facilitate further investment, the Trump administration said. Cheng, who led the talks for Taipei, told a news conference in Washington that the deal was win-win, and would also encourage U.S. investment in Taiwan, for whom the United States is ⁠its most ⁠important international backer and arms supplier. "In this negotiation we promoted two-way Taiwan-U.S. high-tech investment, hoping that in the future we can become close AI strategic partners," she said in livestreamed comments. The investment plan is company not government-led, and Taiwan companies will continue to invest at home, Cheng added.

US, Taiwan sign $250 bil. trade deal, cutting tariffs on Taiwanese goods - The Korea Times

HONG KONG -- The United States and Taiwan reached a trade deal Thursday that cuts tariffs on Taiwanese goods in exchange for $250 billion in new investments in the U.S. tech industry. The deal is the latest President Donald Trump has struck -- such as those with the European Union and Japan -- since he unveiled a sweeping tariff plan last April to address trade imbalances. Trump also has a one-year trade truce with China to stabilize ties with the world's second largest economy. Trump initially set the tariff at 32 percent on Taiwanese goods but later changed it to 20 percent. The new agreement slashes the tariff rate to 15 percent, the same as levied on other U.S. trading partners in the Asia-Pacific region such as Japan and South Korea. In a statement, the U.S. Department of Commerce said the deal with Taiwan would establish an "economic partnership" to create several "world-class" U.S.-based industrial parks in order to help build up domestic production. The department described it as "a historic trade deal that will drive a massive reshoring of America's semiconductor sector." The Taiwanese government affirmed key details in the deal in a statement, saying that the "Taiwan model" will go to the U.S. and help expand the global competitiveness of the island's technology industry while deepening strategic cooperation between the two nations. Taiwan's executive branch said the island's companies would specifically invest $250 billion in industries such as semiconductors, artificial intelligence applications and energy. In addition to cutting the tariffs on the island nation, the Commerce Department said it will exempt certain imports such as generic pharmaceuticals and aircraft components from Taiwan. Taiwanese semiconductor producers that invest in the U.S. also will get favorable tariff treatments, including exemptions, the department said. One day before the deal was announced, Beijing, which claims Taiwan to be part of China, scoffed at it, calling the agreement "an economic plunder" by the U.S. on Taiwan. The deal came just when Taiwan-based TSMC, the world's largest computer chipmaker, on Thursday announced plans to increase its capital spending by as much as nearly 40 percent this year after it reported a 35 percent jump in its net profit for the latest quarter thanks to the boom in artificial intelligence. Taiwan Semiconductor Manufacturing Corp., a major supplier to companies including Nvidia and Apple, reported a net profit of 506 billion new Taiwan dollars ($16 billion) for the October-December quarter, a 35 percent surge from a year earlier, better than analysts' estimates. TSMC said Thursday that its revenue in the last quarter increased 21 percent from a year earlier to more than 1.046 trillion new Taiwan dollars ($33 billion). TSMC said it plans to boost its capital expenditure budget to $52 billion-$56 billion for 2026, up from about $40 billion last year. The company's Taiwan-listed shares have jumped 59 percent over the past 12 months, reflecting its strong position in the AI-driven market. Other tech giants including Microsoft, Meta and Alphabet are spending big on investments in AI infrastructure. "We expect our business to be supported by continuous strong demand for our leading edge process technologies," Wendell Huang, TSMC's chief financial officer, said in a conference call. He said spending would be "significantly higher" in the next three years. Asked about concerns over an AI bubble -- as critics point to ballooning investments which might not pay off -- TSMC chairman and CEO C. C. Wei said he is confident that the growing demand from customers is real. "I'm also very nervous about it, you bet," said Wei. "AI is real. Not only real, it's starting to grow into our daily life." With a market capitalization -- total outstanding shares times share price -- of approximately $1.4 trillion, TSMC is currently more valuable than Samsung Electronics and Alibaba . It is Asia's most valuable listed company. Alphabet, Google's parent, passed the $4 trillion market capitalization mark this month, the fourth Big Tech company to hit that mark after Nvidia , Apple and Microsoft , although worries about an AI bubble had led to occasional sell-offs. TSMC has pledged around $165 billion of investments in the U.S. and said Thursday it's speeding up construction of new plants in Arizona, looking to create a fabrication plant cluster and meet strong demand from clients. A primary beneficiary of AI, given its dominant share in cutting-edge chip manufacturing, TSMC's outlook remains optimistic, analysts from Morningstar said in a recent report. "It (TSMC) is immune from market share shifts as almost every AI company relies on TSMC to make chips ranging from application-specific integrated circuits to GPUs (graphics processing units)," the Morningstar analysts said. "This reliance translates into strong pricing power." TSMC also has strong buffers with a "robust backlog from deep-pocketed customers," they said, even if there are any short-term drops in demand.

Taiwan says it will lead 'democratic' high-tech supply chain with US

TAIPEI, Jan 20 (Reuters) - Taiwan aims to build a "democratic" high-tech supply chain with the United States and form a strategic AI partnership under the new tariffs deal it sealed with Washington last week, Taipei's top negotiator in the talks said on Tuesday. U.S. President Donald Trump has pushed the major producer of semiconductors, which runs a large trade surplus with the United States, to invest more in the U.S., specifically in chips that power AI. Under the terms of the long-negotiated deal, chipmakers like TSMC that expand U.S. production will incur a lower tariff on semiconductors or related manufacturing equipment and products they import into the U.S. and will be able to import some items duty-free. Broad tariffs that apply to most other Taiwanese exports to the U.S. will fall from 20% to 15%. Taiwan companies will also invest $250 billion to boost production of semiconductors, energy and artificial intelligence in the U.S., while Taiwan will also guarantee an additional $250 billion in credit to facilitate further investment. Speaking to reporters in Taipei, Vice Premier Cheng Li-chiun said the deal was not about hollowing out Taiwan's chip industry, which is so important for the economy it is widely referred to as the "sacred mountain protecting the country". "This is not supply-chain relocation; rather, it is support for Taiwan's high-tech industries to extend their strength abroad - through addition, and even multiplication - to expand a strong international footprint in the United States," she said. "In the past we said, 'Taiwan can help'," Cheng added, referring to Taiwan's past efforts to help the international community during the COVID pandemic and other crises. "We hope in the future it will be "Taiwan-U.S. can lead,' with the two sides joining forces and, under the wave of AI, working together to build a high-tech supply chain for the democratic camp. This is our strategic objective." The U.S. is Taiwan's most important backer and arms supplier, despite the lack of formal diplomatic ties. Beijing claims the democratically governed island as its own and has not ruled out the use of force to achieve its goals. (Reporting by Wen-Yee Lee and Ben Blanchard; Editing by Jacqueline Wong and Kate Mayberry)