Taiwan: the bargaining (micro)chip?
Taiwan’s semiconductor strategy is critical to the island’s future security
The Thinker | No. 03/2025
Only last week, JD Vance, Vice President of the United States (US), was telling Kyiv: ‘The very best security guarantee is to give Americans economic upside in the future Ukraine’. He was, of course, referring to a minerals deal.
The message was clear: if you want Washington to care about your country, give it a financial reason to do so. If this is indeed the case, as it appears to be in the transactional era of Trump, why then is Taiwan reducing America’s stake in its future?
On the very same day in which Vance made his remarks, Taiwan Semiconductor Manufacturing (TSMC) pledged a further $100 billion (£77 billion) to build factories in the US. The plan, which is in addition to the $65 billion (£50 billion) which TSMC has already committed, also includes the construction of a ‘major’ research and development centre.
Naturally, this has raised questions about the longevity of Taiwan’s so-called ‘Silicon Shield’. Could this, as one journalist asked Donald Trump, President of the US, ‘minimise the impact’ on the US if the People’s Republic of China (PRC) decided to take Taiwan? Here is what Trump had to say:
Well, it’s a very interesting point. It’s a great question, actually. But this would certainly – I can’t say ‘minimise’. That would be a catastrophic event, obviously. But it will at least give us a position where we have – in this very, very important business, we would have a very big part of it in the United States. So, it would have a big impact if something should happen with Taiwan.
If Washington is less dependent on Taiwan for semiconductors, so the argument goes, the more likely it will be to abandon Taiwan in the event of an attempted annexation. In fact, voices in the ‘Make America Great Again’ (MAGA) movement have argued for a reconsideration of the US’ commitment to Taiwan after America has built up its own domestic chip production. Fringe voices, perhaps, but for how long?
This is a problem for the future, and much will depend on how the Republicans develop. The ‘Silicon Shield’ will hold for the rest of Trump’s presidency. TSMC’s recent announcement came with no timeline and, come 2032, Taiwan is still projected to produce just under half of the world’s supply of logic chips below 10 nanometres (nm) – when it comes to chips, the smaller the better. There are also question marks over US production of the most advanced semiconductors (2nm and less). Taiwan’s presidential office has promised that this technology will not be transferred to the US.
Taipei may be playing the best game it can. Aside from allowing TSMC to avoid tariffs, a deal on chips could keep Trump sweet, as too could increasing defence spending (although Lai Ching-te, President of Taiwan, may need to spend even more to meet expectations). The short-term goal must be to avoid Trump’s ire.
Whether this will work is anyone’s guess; predicting the president’s next step would be a mug’s game. The first few weeks of Trump’s presidency contain mixed signals for Taipei.
On the one hand, Washington’s approach appears consistent. This was certainly the message Raymond Green, Director of the American Institute in Taiwan (AIT), sought to get across this week. And there is much to support this claim, including Trump’s joint statement with Shigeru Ishiba, Prime Minister of Japan, which reaffirmed opposition to force or coercion changing the cross-strait status quo. Additionally, two US Navy ships have already sailed through the Taiwan Strait since Trump took office and, at the beginning of this month, Washington was quick to refute Beijing’s distorting of UN Resolution 2758. No doubt close cooperation continues behind the scenes as well.
The US State Department’s decision to remove ‘we do not support Taiwan independence’ from its website may even be seen as a step-up in US-Taiwan relations under the current administration,although this sentiment continues to be expressed with the wording ‘we oppose any unilateral changes to the status quo from either side.’
Yet, Trump’s approach to settling the war in Ukraine is ominous. Nobody should be surprised by the president’s indifference to defending democracies. However, his willingness to pressure a victim of aggression into concessions, over the heads of allies in the region, is alarming. If the big powers can carve up bits of Eastern Europe, why not East Asia?
The Trump administration in practice does not neatly align with Trump in theory. So far this might be explained by the fact that Trump has paid very little attention to East Asia. While Marco Rubio, Secretary of State, made a meeting of the Quadrilateral Security Dialogue (Quad) his debut, on the foreign policy front, Trump has been focused on Ukraine and Gaza. As long as this is the case, we can expect US institutions to keep things ticking over.
However, what happens if Trump turns his hand to Taiwan policy? In the process of deal-making, could Trump recommit to the words ‘we do not support Taiwan independence’ or go further by stating his opposition to Taiwan independence, as Beijing would no doubt like him to? More than that, would he be prepared, as he has been elsewhere, to throw other sacred norms and commitments up in the air before he begins to bargain?
When asked about whether he would come to Taiwan’s defence, Trump’s go-to line is ‘no comment’. This is a far cry from the reassuring ‘yes’ uttered by his predecessor Joe Biden, former President of the US. Then again, with Trump, perhaps this silence is golden.
Gray Sergeant is the Research Fellow in the Indo-Pacific at the Council on Geostrategy.
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