Asia
TSMC to invest $100 billion in US chip production, seeking tariff relief
Taiwan Semiconductor Manufacturing Company (TSMC) announced on Monday that it would invest $100 billion in the US and increase its capacity in the country, aiming to appease President Donald Trump and ward off threats of tariffs on chip imports.
Trump, who held a press conference with TSMC CEO C.C. Wei, stated that the world’s largest chip manufacturer would invest “at least” $100 billion in its state-of-the-art chip production facilities in Arizona. Trump mentioned that this investment was in addition to the $65 billion TSMC had previously pledged to invest in the US.
“This will create hundreds of billions of dollars in economic activity and enhance America’s dominance in artificial intelligence and beyond,” Trump said, adding that the investment would create 20,000-25,000 jobs.
Wei confirmed that TSMC would build three more US chip factories in addition to the two it had previously committed to constructing, which are set to begin mass production this year. Wei also said they would establish two facilities for advanced packaging, a critical element of the production process that connects chips to enhance performance.
TSMC also plans to build a research and development center as part of its overall plan, which it described as “the single largest foreign direct investment in US history.”
This move is the latest by the business community directed at Trump, amidst his aggressive push to impose tariffs on companies that manufacture overseas for export to the US, with companies announcing measures to win the President’s favor.
Last week, Apple announced it would spend more than $500 billion in the US over the next four years. Trump said there were “numerous” other companies that wanted to announce they would increase their production in the country.
The President emphasized that TSMC was “way ahead of the game” by agreeing to produce more chips in the US, implying that the Taiwanese company could avoid tariffs, which he suggested could be as high as 50%.
“We will have to wait for additional details to assess what the impact of this investment will be on US chip production in the long term,” said Chris Miller, author of Chip War, noting that TSMC hopes the new investment will pave the way for a productive relationship with the administration.
During the presidential race and after taking office, Trump repeatedly threatened to impose tariffs on chip imports, which would have a dramatic impact on Taiwan’s economy.
Pressure on TSMC had been mounting for months following Trump’s accusations that Taiwan had “stolen” the US semiconductor industry. Speaking alongside Wei on Monday, the President said Taiwan had a “monopoly” on chips.
Tariffs would put TSMC under pressure from its American customers to absorb some of the resulting costs. However, TSMC’s bigger concern was that Trump might cancel a contract signed during the Biden administration, in which Washington agreed to support its facilities in the US with more than $6 billion in subsidies.
Commerce Secretary Howard Lutnick said at the press conference that TSMC was encouraged to invest $65 billion because of the subsidies, but added $100 billion thanks to Trump’s efforts to encourage chip production in the US.
Lutnick added, “[Companies] are coming here in massive numbers because they want to be in the world’s largest market and they want to avoid tariffs.”
The TSMC investment further expands its footprint in the US. During Trump’s first term, the group initially promised to build a factory using 5-nanometer technology, but later agreed to use the more advanced 4nm technology at the facility.
In 2024, TSMC reached an agreement with the Biden administration to build a second facility using 2nm technology by 2028 and to establish a third factory in the US by the end of this decade. The total expansion brought TSMC’s planned investment in Arizona to $65 billion.
Unlike its customers, such as Nvidia, which designs and markets chips, or Intel, which designs semiconductors but also manufactures some itself, TSMC only produces chips according to the designs of others.
This approach has allowed it to develop application skills in the increasingly complex production of state-of-the-art chips. TSMC holds more than 90% of the market in the production of the most advanced chips.
AMD CEO Lisa Su praised the work of the Trump administration and TSMC, saying the investment was “extremely important” for the US semiconductor industry and noted that TSMC would begin producing its highest-performance chips in the country later this year.
AMD is a major TSMC customer competing with Nvidia in the advanced artificial intelligence chip sector.
TSMC’s announcement, first reported by The Wall Street Journal, came after Trump administration officials made suggestions in recent weeks to significantly increase the group’s investments in the US to appease the president.
These proposals included TSMC helping to operate Intel’s factories, which lag behind its Taiwanese rival in state-of-the-art production.
According to people familiar with the matter, another idea was for TSMC to make a capital investment in Intel or for the Taiwanese chipmaker’s US operations to be spun off into a company in which the US government would also be a shareholder.
The military operations chiefs of India and Pakistan will meet today to discuss the next steps for the nuclear-armed neighboring countries, following a ceasefire along the border that has seen the most severe clashes in approximately 30 years.
No explosions or missile attacks were reported overnight following initial ceasefire violations. The Indian army announced that Sunday marked the first peaceful night on the border in recent days, despite some schools remaining closed.
The Saturday ceasefire in the Himalayan region, announced by US President Donald Trump, followed four days of intense clashes and diplomatic initiatives.
A senior Indian army official stated that the Indian army had sent a “hotline” message to Pakistan on Sunday regarding the previous day’s ceasefire violations, informing New Delhi of its intention to respond to such incidents.
A Pakistan army spokesperson, however, maintained there were no violations.
The Indian Ministry of External Affairs announced on Saturday that the Directors-General of Military Operations from both sides would meet on Monday at 12:00 PM (06:30 GMT).
Pakistan did not comment on the meeting plans.
After relations deteriorated when India blamed Pakistan for an attack that resulted in the deaths of 26 tourists, the two former rival countries targeted each other’s military facilities with missiles and drones, leading to the deaths of dozens of civilians.
Pakistan denies the accusations and calls for an impartial investigation.
India announced on Wednesday that it had attacked nine “terror infrastructure” targets in Pakistan and Pakistan-controlled Kashmir, though Islamabad stated these were civilian targets.
While Islamabad thanked Washington for its role in securing the ceasefire, it welcomed Trump’s offer to mediate the Kashmir dispute with India. However, New Delhi did not comment on US involvement in the ceasefire or talks to be held in a neutral location.
India, maintaining that disputes with Pakistan should be resolved directly between the neighboring countries, rejected any third-party intervention.
Hindu-majority India and Muslim Pakistan govern parts of Kashmir in the Himalayan region but claim sovereignty over the entire territory.
India accuses Pakistan of being responsible for the insurgency that began in its part of Kashmir in 1989, but Pakistan maintains it only provides moral, political, and diplomatic support to Kashmiri separatists.
China’s export growth showed resilience in April, defying expectations that the effects of the trade war with the US would begin to be felt. According to statistics released by China’s customs administration on Friday, exports increased by 8.1% year-on-year in dollar terms.
This increase was below the 12.4% growth recorded in March. However, according to data released by the customs administration on Friday, this increase was well above the 1.9% growth forecast in a Reuters poll of economists.
Imports, meanwhile, fell for the third consecutive month, contracting by 0.2% last month.
Exports to the US fell by 21% last month, while imports from the US decreased by 13.8%.
Exports to China’s largest trading partners, the Association of Southeast Asian Nations and the European Union, increased by 20.8% and 8.3% respectively.
The figures were released after Washington and Beijing entered a trade war.
US President Donald Trump last month implemented tariff increases of up to 145% on most products imported from China and said he would impose new tariffs even on low-value packages from the country. Beijing responded with a 125% tariff.
The two countries will begin trade talks in Geneva on Saturday. The US will be represented by Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer, while China’s delegation will be led by Vice Premier He Lifeng, the country’s top economic official.
This will be the first high-level meeting between the two sides since January, when Chinese Vice President Han Zheng attended Trump’s inauguration ceremony. Bessent said the trade war was “unsustainable.”
During the five-day May Day holiday, Chinese spending increased by 8% year-on-year, reaching 180.27 billion yuan (approximately $25 billion), indicating that consumer activity remains vibrant.
An estimated 314 million domestic trips were made, marking a 6.4% increase compared to the previous year.
The May Day holiday, one of the country’s longest breaks, is closely watched as a barometer of Chinese consumer confidence.
China’s Ministry of Culture and Tourism recorded 314 million domestic trips during the holiday, a 6.5% increase, while the number of transactions using Weixin Pay, a popular payment app, rose by more than 10% year-on-year, with a notable surge in restaurant spending.
According to Reuters’ calculations based on official data, total spending per person during the five-day May holiday period, typically a busy time for family travel, increased by 1.5% to 574.1 yuan.
This figure remained below pre-pandemic levels, when spending per person was 603.4 yuan.
Consumption in the world’s second-largest economy has been hurt by a post-pandemic slowdown and a prolonged property crisis, with the effects of the US-China trade war expected to deepen these challenges.
Meanwhile, China’s services sector saw a slowdown in new order growth compared to March, according to a private sector survey released on Tuesday, due to uncertainty caused by US tariffs.
Despite stronger-than-expected economic growth in the first quarter, supported by government stimulus, the Chinese economy continues to face persistent deflationary risks.
The Caixin/S&P Global services purchasing managers’ index (PMI) fell to 50.7 from 51.9 in March, marking its lowest reading since September.
This aligns largely with the official survey, which showed services activity in China easing to 50.1 from 50.3 the previous month.
The Caixin services survey indicated that new business growth slowed to its weakest level since December 2022, although export orders saw some increase, partly linked to the recovery in tourism.
Zichun Huang, China economist at Capital Economics, said the drop in the Caixin PMI “provides further evidence that the trade war is weighing on economic activity in China, even beyond the manufacturing sector.”
Huang added, “While some caution is clearly warranted, we suspect firms are overstating how much damage US tariffs will do.”
Around 48% of China’s workforce was employed in the services sector in 2023, and the sector contributed 56.7% to total GDP last year. However, US President Donald Trump’s trade actions could hit the manufacturing sector and damage businesses’ hiring plans and consumer confidence.
Business sentiment in the services sector grew at its slowest pace since February 2020, with companies citing US tariffs as a major concern.
Service providers cut jobs for a second consecutive month to reduce costs, leading to an increase in backlogs of work and pushing the relevant indicator into expansionary territory for the first time this year.
Firms also lowered prices to attract customers despite high input costs.
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