Fear and resignation are Trump’s $100 billion “protection fee” after payments on “the world’s most powerful company”

It was a surprise ceremony at the White House hosted by President Donald Trump, announcing a $100 billion investment from his so-called world’s most powerful company, Taiwan Semiconductor Manufacturing Corporation (TSMC).

But nearly 8,000 miles, the mood is far from celebrating. Instead, last week’s shock announcement reignited Taiwan’s fear of losing its crown jewelry (its crown semiconductor industry) to the United States due to political pressure.

Former president of the island’s democratic nation, Ma Ying-Jeou, wasted no time accusing the ruling Democratic Progressive Party (DPP) of “selling TSMC to Trump” as a “protection fee.”

“This is a major national security crisis,” MA, a member of the opposition Kuomintang (KMT), wrote on his Facebook page shortly after the signing ceremony at the White House on March 4. It will “hare a significant negative impact on people’s confidence, trans-morphic relations, and Taiwan’s future geopolitical status.”

To reassure the public, Taiwan President Lai Ching-te appeared in the Taipei presidential office last week with TSMC CEO CC WEI, saying the company’s U.S. investment will not undermine its commitment to its own country base and its commitment to planned expansion.

TSMC produces over 90% of the world’s advanced microchips, from smartphones and artificial intelligence to weapons, and this powers all features. This is why many in Taiwan believe that the global reliance on semiconductors is a “silicon shield” which is a deterrent to China’s potential invasion.

China’s ruling Communist Party claims Taiwan is part of its territory, that is, in recent years, Beijing’s military activities around Taiwan have escalated, regularly flying fighter jets and conducting exercises in waters near the island.

“Today Ukraine, Taiwan tomorrow”

Taiwan relies on US military and political support. Under the Taiwan Relations Act, the United States is legally obliged to provide Taiwan with means to defend itself from possible attacks by China.

But Trump’s recent remarks have created uncertainty about the future of US-Taiwan relations. He repeatedly accused Taiwan of “stealing” the US semiconductor industry, a statement that is widely controversial, and said that Taiwan should pay for “protection” for the US.

For many on the autonomous island, the term “Ukraine today, Taiwan tomorrow” has increasingly resonated with people as they watched Trump’s long-standing American policy by playing the Kremlin rhetoric and warmth for Moscow, while alienating traditional European allies and Kiev. Taiwanese see similarities between their democracy and Ukraine, both facing the existential threat of radical expansionist neighbors.

During intense exchanges between Trump, Vice President JD Vance and Ukrainian President Volodymyr Zelensky had a sudden suspension of military aid to Ukraine earlier this month. Aid resumed this week after Ukraine accepted a 30-day ceasefire from the United States. The White House also urged Zelensky to sign a deal to allow the United States to acquire untapped mineral wealth in Kiev.

Retired Tammy Chao expressed deep concern about Taiwan’s security following the TSMC announcement, likening Trump’s approach to his approach to Ukraine. She describes him as a “dealer” and may eventually see Taiwan as a bargaining chip.

“Taiwan, soon it’s like [what] He told Zelensky: “You don’t have cards to play,” Taiwan has no cards to play. “She said. “TSMC is the best card. ”

But others don’t seem to be too worried. Financial industry professional Fred Lin said he believes TSMC made the decision cautiously.

“Who doesn’t pay the protection fee to the United States? There is no doubt that this is a kind of protection fee that we can understand, but it is the reality of international politics,” he said.

But Trump administration officials also said they need to allocate participation in European security to focus on threats from Asia and China. Prior to election, Vance feared that U.S. support for Ukraine might hinder its ability to help Taiwan amid Chinese attacks.

The researchers say there are limitations in the comparison between the security environment between Ukraine and Taiwan and believe that the island’s security is affected by a variety of factors outside its semiconductor industry, including China’s broader geopolitical ambitions and Taiwan’s strategic position.

Whether China is ultimately driven by its core interests, says Min-Yen Chiang, a non-resident research institute at the Taipei Institute.

He mentioned this time in 1950 when his Seventh Fleet was sent to the Taiwan Strait early during the Korean War to prevent China from invading Taiwan. The strategic move of then-President Harry Truman neutralized the Taiwan Strait and ensured that the Korean War did not trigger wider conflicts, thus maintaining stability in the Asia-Pacific region.

“Taiwan has no semiconductor industry at all,” he said.

Still promised

Last week, President Lai said Taipei did not “face any pressure from Washington” when it concluded a TSMC deal, which the company said was the largest non-U.S. company ever invested in.

WEI stood by him, attributed the increased investment to “strong demand” from U.S. customers such as Apple, Nvidia, AMD, Qualcomm and Broadcom, who hope to reduce potential supply chain risks by making chips locally.

Under the Bipartisan Chip Act, TSMC received $6.5 billion in grants for its first three Arizona plants, led by Biden Administration, which allocates $39 billion in federal funds to boost the home semiconductor manufacturing industry.

Wei added: “Where we are the best wherever we build the fab.”

In addition to three other manufacturing facilities, the new investment promises to provide two chip packaging plants and a R&D center to improve production process technology.

Wei clarified that the development of cutting-edge next-generation chip manufacturing technology will remain in Taiwan and will remain 10 times higher than that of U.S. facilities.

Semiconductor analysts appreciate the company’s “agile” decision.

TF International Securities analyst Ming-Chi Kuo praised TSMC in an online analysis, calling it “the most successful non-U.S. company in negotiations with the Trump administration.”

“While the $100 billion investment seems to be huge, the lack of details provides flexibility for spending based on future conditions, mitigating the impact on profitability,” Kuo wrote.

Eric Chen, an analyst at market research firm Digitimes Research, said TSMC’s investment has primarily alleviated Trump’s concerns. “But, of course, we can’t know when Trump will change his position – he’s notorious for his sudden turnaround,” he said.

He also added that TSMC is “not afraid” that Trump may remove subsidies from the chip law, stressing that the company’s decision to invest in the U.S. is driven by customer demand.

Weapon tariffs

TSMC’s $100 billion investment marks the latest investment in the corporate wave, with huge sums of money being paid to the United States. But it was one of the first major foreign companies to do so, and Trump claims more such investments are underway.

Contrary to his predecessor Biden’s approach to incentivizing domestic investment through subsidies, Trump prefers weaponizing tariffs. So far, it has been proven to work.

Trump had previously threatened to impose a 25% tariff on semiconductors, cars and drugs as early as next month. Commerce Secretary Howard Lutnick said in announcing the TSMC investment that the company chose to expand in the U.S. due to the threat of tariffs and did not receive additional grants.

In late February, Apple committed $500 billion over the next four years to expand facilities, manufacturing and projects in the U.S. Oracle, OpenAI and Softbank announced in January that they will invest $500 billion to create a new company that will build an artificial intelligence infrastructure in the United States.

Chang-Tai Hsieh, an economist at the University of Chicago Booth School of Business, said Trump is expected to heat up on other major companies as TSMC’s new investment in the U.S.

He said that puts pressure on Samsung and Intel, the other two major computer and AI chip manufacturers in the world.

South Korea’s SK Hynix is ​​another key player in memory chips with Samsung, and is expected to feel squeezed. Samsung has previously promised to invest $37 billion in Texas, while SK Hynix announced plans to build a $3.87 billion chip packaging factory in Indiana last year. Samsung and SK Hynix declined to comment.

It is clear that companies like TSMC and others will have to “try to make Trump happy,” Hsieh said. But he also warned of risks associated with such concessions.

“Once you agree to the blackmail, it won’t end,” he said.

Simone McCarthy of CNN contributed the report.

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