US, Taiwan to Invest US$250 Billion Into American Semiconductor Manufacturing

The US and Taiwan have signed a trade and investment agreement aimed at reshoring semiconductor manufacturing and reinforcing US control over one of the world’s most strategic industries.

According to a new White House fact sheet, Taiwanese semiconductor and technology companies have committed to at least US$250 billion in new direct investment in the US, with an additional US$250 billion in credit guarantees to support expansion across the semiconductor ecosystem.

Both also plan to develop large industrial clusters and technology parks on US soil to anchor next-generation semiconductor manufacturing and advanced research.

Taiwan, for its part, will facilitate greater US investment into its own semiconductor, AI, defense technology, telecommunications, and biotechnology sectors to expand market access for American firms.

The trade framework also introduces a more structured tariff regime. Reciprocal tariffs on Taiwanese goods will be capped at 15 percent, while certain products such as generic pharmaceuticals, aircraft components, and unavailable natural resources will face zero-percent reciprocal tariffs.

Existing Section 232 duties on Taiwanese auto parts, timber, and related products will likewise be capped at 15 percent.

Semiconductors occupy a special place in the agreement. Taiwanese chipmakers that invest in new US production capacity will be granted significant flexibility to import chips during construction without incurring Section 232 duties.

In addition, companies building new facilities may import up to 2.5 times their planned US capacity duty-free during construction, and up to 1.5 times their new domestic output after projects are completed.

US officials framed the agreement as a decisive step toward reversing decades of offshoring that hollowed out domestic chipmaking capacity.

The country’s share of global wafer fabrication has fallen from 37 percent in 1990 to less than 10 percent in 2024, leaving American manufacturers heavily dependent on East Asian supply chains.

The deal comes just days after Trump formally imposed a 25 percent tariff on “certain advanced computing chips,” including NVIDIA's (NASDAQ:NVDA) H200 and AMD’s (NASDAQ:AMD) MI325X processors, citing national security concerns under Section 232 of the Trade Expansion Act of 1962.

Chips imported to support the buildout of US technology supply chains, however, will be exempt.

The White House has also warned that broader semiconductor tariffs could follow. Trump has previously said companies that commit to domestic production would avoid harsher levies, including a floated 100 percent tariff discussed last year.

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Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.