Nowhere is the logic of U.S. President Donald Trump’s trade policy more obviously flawed than his attempt to reshore semiconductor manufacturing to the United States.
Following Trump’s March claim that Taiwan “stole” its chip industry from the U.S. and his suggestion that Taipei should pay for American protection, Taiwan Semiconductor Manufacturing Company announced a further $100 billion investment in its Arizona plant.
Flanked by TSMC Chairman C.C. Wei at a White House meeting, Trump touted the investment – which will reportedly add new wafer fabs, advanced packaging facilities, and an R&D center to existing infrastructure – as ensuring the “most advanced AI chips” would now be manufactured in the United States. Commerce Secretary Howard Lutnick said it was proof that Trump’s tariff policy was bringing manufacturing and investment back to America.
Yet neither of these statements is tenable.
At best, the Arizona plant will turn out 3-nanometer chips by 2028, a level Taiwan reached in 2022. For each incremental improvement in the United States and elsewhere, you can be sure Taiwan will have moved commensurately several steps ahead.
Echoing the views of industry experts, the Danish policy analyst Jonas Parello-Plesner, a former diplomat stationed in Washington during Trump’s first term, has written of his confidence that “the holy grail” of cutting-edge chips will remain in Taiwan. Based on his conversations with policymakers in Taiwan, there is no way Taipei is relinquishing its silicon shield.
As for the idea that the chips industry will “return” to U.S. shores at any substantive level, few see this as feasible. First there’s the obvious issue of cost. “Making chips at scale in the U.S. is obviously going to be more expensive,” says Honghong Tinn, author of “Island Tinkerers,” a social history of Taiwan’s computer and semiconductor industry. “So, they would probably need huge subsidies,” continues Tinn, who is also an assistant professor in the Program in the History of Science, Technology, and Medicine and the Department of Electrical and Computer Engineering at the University of Minnesota, Twin Cities.
In fact, a subsidy of at least $6.6 billion was already in place under the CHIPS and Science Act (often shortened to the CHIPS Act), a bipartisan law passed under the Biden administration in 2022. The act oversaw the first stage of TSMC’s Arizona plant, with $65 billion invested to establish the initial fabs at the site. While the precise details are murky, many analysts have argued that further investments in and development of the site were covered by the initial agreement reached under the law.
Absent any details to differentiate it from the provisions and deals that were already in place under the CHIPS Act, there is no indication of how the Trump administration intends to bring back chip manufacturing to the United States.
“Trump’s decisions show not only that he doesn’t trust foreign countries, including Taiwan, but also that he doesn’t understand his own Silicon Valley that well,” says Chang Kuo-hui, a professor and research fellow at National Taiwan University’s Graduate Institute of National Development.