Taiwan invests $250 Billion in US semiconductor manufacturing

WASHINGTON - The United States and Taiwan signed a trade agreement on January 15, 2026, committing Taiwanese semiconductor and technology companies to direct investments of at least $250 billion in U.S. production facilities for semiconductors, energy and artificial intelligence (AI).

Credit: TSMC

The pact, formalized between the American Institute in Taiwan and the Taipei Economic and Cultural Representative Office in the United States, also requires Taiwan to provide at least $250 billion in credit guarantees to support expansion of the semiconductor supply chain on American soil.

Taiwanese firms will channel the funds into building and expanding advanced manufacturing capacity across the targeted sectors.

"Taiwanese semiconductor and technology enterprises will make new, direct investments totaling at least $250 billion to build and expand advanced semiconductor, energy, and artificial intelligence production and innovation capacity in the United States," the U.S. Department of Commerce stated in its fact sheet.

The agreement sets the U.S. reciprocal tariff rate on Taiwanese goods at no more than 15 percent, down from 20 percent, and applies zero percent tariffs to generic pharmaceuticals, their ingredients, aircraft components and certain natural resources.

Under Section 232 national security tariffs, Taiwanese companies building new U.S. semiconductor plants can import up to 2.5 times the planned capacity tariff-free during construction, with a preferential rate for imports above that quota.

Completed U.S. projects allow imports of 1.5 times the new production capacity without duties.

Section 232 duties on Taiwanese auto parts, timber, lumber and wood products will not exceed 15 percent.

The deal establishes U.S.-based industrial parks for next-generation technology and manufacturing.

Taiwan will facilitate U.S. investments in its semiconductor, AI, defense technology, telecommunications and biotechnology sectors.

"The 15 per cent tariff rate we secured is the most favourable among the countries with the biggest trade surpluses with the US, including allies such as Japan, South Korea [and] the EU, and will create a level playing field," the Taiwanese government stated.

Taiwan Semiconductor Manufacturing Co., the world's largest contract chipmaker, has purchased hundreds of acres adjacent to its existing Arizona facilities as part of expansion plans tied to the agreement.

TSMC previously committed $40 billion to Arizona fabs producing chips for clients including Apple and Nvidia, utilizing subsidies from the CHIPS Act.