Did Trump misunderstand Taiwan's role in global chip Industry?

Comment by Trump: Former US President Donald Trump, now the Republican candidate for this year's presidential election, has just stepped into a hornet's nest in Taiwan with his latest comments about the semiconductor industry. The former president who emerged this summer as the Republican nominee for the presidency said last month that "Taiwan should pay us for defense" and accused the island of stealing American semiconductor business. Hence, these comments immediately brought down the stock price of the world's largest contract chipmaker TSMC, a vital supplier to technology leaders like Apple and Nvidia.

Response of Taiwan's Economy Minister

In response to comments by Mr. Trump, Taiwan's Economy Minister Kuo Jyh-huei suggested on Tuesday that the former president might have been misunderstood about Taiwan's position in the global semiconductor supply chain. Speaking with reporters in Taipei before this week's Semicon Taiwan exhibition, Kuo, a former senior executive at TSMC supplier Topco Scientific, flatly denied that Taiwan had "stolen" the US chip industry.

Misunderstanding Fueled by Misinformation

Taiwan plays a complementary role to the US semiconductor industry," said Kuo, "basically creating chips ordered by US companies." The misunderstanding of Trump perhaps is because others misled him, possibly a friend or competitor in Taiwan, he said. "The president has a lot on his plate," Kuo said, trying to defend Taiwan's contributions to the industry.

TSMC's Global Expansion Supports US Supply Chain

TSMC currently invests billions of dollars in new overseas plants, including a $65 billion investment promised for three plants in Arizona. Those plants are at the forefront of the Biden administration's push to make the US less dependent on foreign-made chips and to rework its semiconductor supply chain. The US Congress passed the $52.7 billion Chips and Science Act to increase US semiconductor output by offering research and manufacturing subsidies.

Unshakeable US-Taiwan Alliance

The US has staunchly backed Taiwan under both the Trump and Biden administrations, although the US continues with arms sales to arm Taiwan. Initially, Trump made his foray into engagement with Taiwan when, in 2016, he spoke with the then-President Tsai Ing-wen soon after his election victory. At the time, that call angered Beijing but was welcomed in Taipei. Taiwan's government still rebuffs China's sovereignty claims and asserts itself as a democratic, self-governing entity.