[Taiwan Chip Dispatch] Why the Economic Affairs Minister Called Trump's Claim "Fake News"

Taiwanese Minister Apologizes After Criticizing Trump’s “Fake News”
Sensitive Reaction to Trump’s Political Pressure Tactics
Rising Concerns Over “Silicon Shield” TSMC’s Potential Subordination to the U.S.

U.S. President Donald Trump claimed that Taiwanese foundry (semiconductor contract manufacturing) company TSMC would "invest $300 billion in the United States" ahead of announcing tariffs on semiconductor products, sparking a war of words with Taiwanese authorities. Kuo Tzu-hui, Taiwan's Minister of Economic Affairs, strongly refuted President Trump's remarks, calling them "fake news," but later issued an apology. This is interpreted as a sign of caution against excessive investment pressure and the potential subordination of the country's key industry to the United States.

According to local media outlets such as Taiwan Economic Daily and United Daily News on August 11, Minister Kuo Tzu-hui told reporters on August 6, "(The claim about TSMC’s investment in the U.S.) is fake news, and I don't know who made it," adding, "Such a claim has never been considered." This was a rebuttal to President Trump's statement that "TSMC will build the world's largest semiconductor manufacturing facility in Arizona, and a total investment of $300 billion will be made."

As the controversy erupted over these remarks, Taiwan's Ministry of Economic Affairs issued an urgent statement that evening, saying, "We did not fully understand the background of the question and were not specifically commenting on President Trump's remarks."

TSMC also indirectly refuted President Trump's claim by responding to media inquiries with data stating that its U.S. investment amounts to "$165 billion." In March this year, TSMC announced plans to expand its U.S. investment by more than $100 billion. After announcing a $12 billion U.S. investment in 2020, TSMC had already increased the total to $65 billion. Upon completion of new plant construction, TSMC will have at least six local factories in the United States.

President Trump’s "exaggerated statement" is seen as political rhetoric aimed at pressuring semiconductor companies to invest in the U.S. The U.S. government has set tariffs on semiconductor products at 100% and has made it a policy that companies must build local factories to be exempt from these tariffs. From Taiwan's perspective, Minister Kuo Tzu-hui’s public rebuttal could have unnecessarily strained bilateral relations. TSMC is likely to qualify for tariff exemptions by fulfilling the condition of "building local factories during Trump’s term."

TSMC building located in Hsinchu, Taiwan. Photo by Reuters and Yonhap News

There is a strong perception in Taiwan that this issue is directly related to the sovereignty of the nation’s strategic industries. If TSMC, which dominates the global foundry market, shifts its production base excessively to the U.S., the semiconductor industry structure that has served as Taiwan’s "silicon shield" for national security could be weakened. The semiconductors produced by TSMC have attracted U.S. interest and provided protection from external threats such as China, but if U.S. local investment increases, one of the main reasons for the U.S. to defend Taiwan could disappear.

There are also concerns that U.S. investments could delay the expansion of infrastructure within Taiwan. Since equipment and manpower are limited, large-scale overseas investments could push domestic projects, such as the construction of new production lines, down the priority list.

Taiwan Economic Daily News = Reporter Lin Junliang / Translation by Asia Economy

※This column is published as part of a strategic partnership between Asia Economy and Taiwan Economic Daily News.