By Tae Kim

Taiwan is ready to come to the bargaining table as President Donald Trump threatens chip import tariffs on the island.

"In light of President Trump's concerns about our country's semiconductor industry, the government will carefully respond and strengthen communication with the U.S.," Taiwan President Lai Ching-te told reporters on Friday. "The government will also strengthen guidance and encourage Taiwanese companies to invest more in the United States."

About 90% of the world's most advanced chips, including the main processors inside mobile phones, AI graphics processing units, and personal computers, are made in Taiwan by Taiwan Semiconductor Manufacturing. TSMC is building a few plants in Arizona, but it will be a fraction of its worldwide capacity.

Last month, Trump told House Republicans the U.S. would eventually impose tariffs of 25%, 50%, or even 100% on chip imports to incentivize domestic semiconductor manufacturing.

Bernstein analyst Stacy Rasgon says the best outcome is for the Trump administration to negotiate a deal where TSMC builds additional chip factories in the U.S. versus relying on Intel, which is behind Taiwan in chip making capability.

"It would seem easier for the U.S. to pursue a 'made in America' mandate by simply encouraging [TSMC] to build more capacity in the U.S.," Rasgon wrote in a note to clients Friday.

Write to Tae Kim at tae.kim@barrons.com

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February 14, 2025 13:10 ET (18:10 GMT)

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