Scholars, firms upbeat about Taiwan semiconductor sector despite opposition concerns

Washington/Taipei, Jan. 15/16 (CNA) Scholars and business leaders said a new trade agreement between Taipei and Washington is expected to further deepen bilateral economic and business ties, though Taiwan's opposition has raised concerns about the scale and implications of the pledged investment by Taiwan.

At a news conference in Washington on Thursday, Vice Premier Cheng Li-chiun (鄭麗君) said that under a signed memorandum of understanding (MOU), Taiwanese semiconductor and technology companies will invest at least US$250 billion in the United States, while the Taiwanese government will provide up to US$250 billion in credit guarantees to support those U.S. investments.

Cheng said the agreement includes a tentative deal on tariff reductions and grants semiconductors and related products the most favorable treatment under Section 232 of the U.S. Trade Expansion Act. However, the final tariff rates and quotas have yet to be finalized.

● Taiwan commits to investing US$250 billion in U.S. chip sector

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Riley Walters, an international economics expert at the Hudson Institute, told CNA that given the scale of Taiwan's planned investment and the breadth of the agreement, "this might be the closest thing that the U.S. and Taiwan ever have to a bilateral trade agreement."

Unlike the U.S.-Taiwan Initiative on 21st-Century Trade launched during former U.S. President Joe Biden's administration, which primarily addressed non-tariff barriers, the newly signed MOU goes directly to the core of trade by focusing on investment and future supply chains, Walters said, adding that it would bring the two economies into closer alignment.

Expecting Taiwan Semiconductor Manufacturing Co. (TSMC) to be among the participants in the investment plan, Walters said he does not believe the agreement would hollow out Taiwan's economy, noting that many of the planned projects are intended to meet future demand for semiconductor production and advanced technologies.

"The demand for these ICT products [will] just continue to explode over the next 10 years," Walters said. "So really, this isn't going to replace Taiwan at all."

There have been concerns from the opposition and critics in Taiwan that having Taiwanese semiconductor companies invest heavily in the U.S. and meet its demand for chips would hollow out Taiwan's domestic industry and eliminate the "silicon shield" that protects it from a Chinese attack.

The Taiwan People's Party said in a statement Friday that it was "highly concerned" that Taipei's announcement, along with U.S. Secretary of Commerce Howard Lutnick's claims about reshoring 40 percent of Taiwan's supply chain to the U.S., could pose risks to Taiwan's domestic economic interests.

In response to Lutnick's claims, Lien Hsien-ming (連賢明), president of the Chung-Hua Institution for Economic Research (CIER), said via social media on Friday that if the newly pledged US$250 billion investments are carried out by TSMC, it would be difficult for them to be completed before the end of President Donald Trump's second term in 2028.

It remains unclear whether the US$250 billion in direct investment in the U.S. includes the US$165 billion previously pledged by TSMC.

Responding to CNA on Friday, TSMC said it welcomed the achievement of a stable trade agreement between the U.S. and Taiwan, noting that close trade relations are crucial for driving future technological development.

Separately, cleanroom engineering firm United Integrated Services Co. (UIS) and Marketech International Corp. (MIC), which specializes in plant engineering and process system integration for the tech industry, said the government's plan to provide credit guarantees would help facilitate future fundraising.