At a significant trade event last week, Taiwan demonstrated its chip diplomacy skills by presenting itself as a democratic and trustworthy supplier for the AI revolution and indicating a readiness to share the advantages of its semiconductor expertise with like-minded partners.
Taiwan, which is diplomatically isolated and home to businesses like TSMC (2330.TW), opens a new tab whose processors power AI applications, has long sought to use its technological strength to gain international support, something Beijing regularly tries to thwart, claiming the island is just one of its provinces.
However, the United States, Taiwan’s most significant foreign ally and supplier of weapons, is also pressuring Taiwan to move additional chip production there. This coincides with TSMC’s $265 billion investment in Arizona facilities.
Unusually speaking at two different ceremonies on the same day at the SEMICON Taiwan trade exhibition, President Lai Ching-te stated that Taiwanese businesses were growing internationally to “let resilience create shared prosperity” and that democracy and the rule of law were the foundation of the island’s semiconductor strength.
When launching the U.S. pavilion at the exhibition, Economy Minister Kung Ming-hsin announced that Taiwanese businesses planned to invest an additional $20 billion in the nation. Uncertainty persists despite Taiwan’s agreement with Washington earlier this year to boost investment in the United States in return for lower export duties.
Last week, U.S. Commerce Secretary Howard Lutnick informed CNBC that businesses who do not produce chips domestically might face semiconductor tariffs. During SEMICON, Bill Frauenhofer, the Commerce Department representative in charge of the tariff deal with Taiwan, expressed optimism.
He claimed that the “phenomenal partnership” between the United States and Taiwan was effective. “And we really, both of us, have vested interests in terms of making this successful.” Taiwanese businesses understand that they must grow their manufacturing outside of the island.
