TSM Stock: Taiwan Boosts US Ties with $100B Investment Amid China Threat

In recent weeks, Taiwan has been pushing for deeper ties with the United States, as the looming threat from China intensifies. Hours after Taiwan’s largest semiconductor company, Taiwan Semiconductor Manufacturing Co. (TSMC), announced it would boost its investment in Arizona from $65 billion to a whopping $165 billion, President Donald Trump made it clear why Taiwan is so keen on winning favor from the US.

Taiwan’s decision to strengthen its ties with the US comes on the heels of Trump’s surprising stance on Ukraine. He recently suspended military aid to Ukraine, causing concern in Taiwan. Trump’s blunt message to Ukrainian President Volodymyr Zelenskyy—telling him that the US “didn’t have the cards” in US-brokered peace talks—left many in Taiwan wondering if their own security could be next to be neglected. TSM Stock: Taiwan Boosts US Ties with $100B Investment Amid China Threat.

TSM Stock
TSM Stock

Taiwan’s Semiconductor Power: A Bargaining Chip

Some Taiwanese believe that the country’s semiconductor sector could serve as a crucial bargaining chip in securing Washington’s support. TSMC, which is responsible for producing 90% of the world’s most advanced chips, sees the US as a critical partner. In their new announcement, TSMC pledged to significantly increase its Arizona investment. Taiwan’s strategic importance, particularly its central role in the global chip industry, is something Taiwan is hoping to leverage in its dealings with the US.

Lo Chih-cheng, a former lawmaker from Taiwan’s ruling Democratic Progressive Party, emphasized the importance of putting “bargaining chips on the table,” suggesting that Taiwan’s role in the global chip supply chain makes its strategic value even more significant than that of Ukraine. Taiwan’s defense minister, Wellington Koo, echoed this sentiment, noting that while the US values shared democratic values, the country also prioritizes national interests.

The Threat from China and Taiwan’s Strategic Importance

For Taiwan, US support is crucial not only in terms of diplomacy but also in defending against the growing threat of China. China has long claimed Taiwan as part of its territory, and the Chinese government has continued to threaten forceful annexation. Taiwan’s future security heavily relies on US backing, especially under the Taiwan Relations Act, which deems any attempt to change Taiwan’s status through non-peaceful means as a grave concern.

However, Taiwan is aware that Trump’s approach to Taiwan has not always been favorable. Former National Security Advisor John Bolton revealed that Trump was notably uninterested in Taiwan, viewing it as an inconvenience in his dealings with China. Despite this, the initial signals from the White House seemed promising. During a public appearance, Trump praised TSMC’s commitment to building US-based chip production plants, calling them “ahead of the game” and positioning them to avoid tariffs on semiconductor imports.

Balancing US and Taiwan’s National Interests

While Taiwan seeks to build stronger ties with the US, it also must balance its own national interests, particularly in terms of technological development and sovereignty. Taiwan’s government has insisted that its research and development for semiconductor technologies remain within Taiwan’s borders, even as TSMC’s investment in Arizona includes an R&D center. This move raises concerns about whether Taiwan is giving away too much in terms of its most advanced technologies to secure US support.

Taiwan’s defense minister, Koo, has been cautious, suggesting that the country must “carefully consider” whether transferring critical technology to the US would diminish Taiwan’s own strategic position. A recent poll indicated that 85% of respondents opposed the transfer of TSMC’s 2-nanometer technology to the US, reflecting growing concerns about Taiwan’s technological edge and how the US might leverage that for its own advantage.

Economic Ties and Security Investments: Strengthening the US-Taiwan Relationship

Taiwan’s economic relationship with the US has been growing, with Taiwan’s trade surplus with the US reaching a substantial $73.9 billion in 2025. The demand for AI chips has been a key driver of this increase. Taiwan’s leadership is keen on reinforcing the economic relationship through increased defense spending, as well as bolstering ties in other sectors. Taiwan’s state-owned oil company CPC is reportedly looking to ramp up its purchases of liquefied natural gas from the US, with the aim of increasing the proportion of US-sourced LNG to 25%.

On the defense front, Taiwan is moving forward with a substantial $10 billion arms procurement package, which includes advanced weaponry such as Himars rocket launchers and command and control systems. Taiwan is also working with the US on initiatives to strengthen its defense supply chain and increase investment from its tech manufacturing sector, including support for the creation of industrial parks modelled on Taiwan’s own science parks.

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The Uncertainty of Taiwan’s Future with Trump

Despite these initiatives, many Taiwanese remain uncertain about the future of their relationship with the US, particularly under Trump’s leadership. The CEO of a major Taiwanese tech company, who wished to remain anonymous, expressed concern about Trump’s unpredictability in dealing with Chinese President Xi Jinping. The CEO questioned whether Trump could one day offer Taiwan as a bargaining chip to balance trade relations with China, potentially jeopardizing Taiwan’s sovereignty in the process.

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Taiwan’s efforts to build stronger ties with the US are undoubtedly motivated by the growing threat from China. Yet, the island nation faces the challenge of navigating this relationship while safeguarding its technological advancements and national interests. Taiwan’s semiconductor sector is undoubtedly a powerful asset, but the coming years will reveal whether the “silicon shield” can truly protect Taiwan from external pressures and whether its strategic position will continue to ensure US commitment to its security.

In the face of rising tensions, Taiwan’s quest for closer US ties is an attempt to solidify its defense, maintain its technological dominance, and ensure that its future remains free from Chinese control. However, as Taiwan walks this fine line, the nation’s future depends on maintaining a careful balance of economic, technological, and diplomatic interests—while hoping that Washington remains steadfast in its commitment to Taiwan’s security.

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TSM Stock: Taiwan Boosts US Ties with $100B Investment Amid China Threat

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