USA–Taiwan: A New Strategic Semiconductor Agreement

Semiconductors are no longer merely industrial components; they have become a critical pillar of economic security and strategic autonomy for the world’s leading economies. In a context characterized by geopolitical instability and fragile supply chains, the USA–Taiwan agreement represents a joint effort to strengthen manufacturing and technological capacity across the trans-Pacific region.

A central element of the agreement is the commitment by Taiwan Semiconductor Manufacturing Company (TSMC) - the world’s largest contract chip manufacturer - together with other Taiwanese operators, to invest up to USD 250 billion in the United States over the coming years. The investment will support the construction of advanced manufacturing facilities, research centers, artificial intelligence–related infrastructure, and highly specialized industrial hubs.

In return, the United States will grant Taiwan preferential tariff treatment across a broad range of technological goods, alongside targeted tax incentives for companies choosing to establish operations within U.S. territory. This framework forms part of Washington’s broader industrial strategy, launched through the CHIPS and Science Act, aimed at reshoring expertise and manufacturing capabilities in the microchip sector.

The agreement reflects an increasingly widespread trend among advanced economies: the diversification of production geographies in order to reduce dependence on a limited number of localized hubs. After years of strong manufacturing concentration in East Asia, the pandemic and escalating trade tensions exposed the vulnerability of overly centralized supply chains. The objective is now to build a broader and more flexible value chain capable of withstanding sudden shocks. The USA–Taiwan agreement should therefore be understood within this broader context, as a strategic choice designed to ensure stable and secure long-term supply.

For Taiwan, a new phase is beginning. The agreement represents both an opportunity for industrial expansion and a strengthening of ties with Washington. At the same time, it poses a significant challenge: maintaining technological leadership while ensuring that progressive internationalization does not diminish the strategic relevance of domestic production. Taiwanese authorities have clarified that the most advanced technologies — particularly those relating to sub-3-nanometer process nodes — will remain on the island in order to safeguard Taiwan’s competitive advantage.

At the international level, China reacted firmly, describing the agreement as a form of interference and a risk to regional stability. Geopolitical tensions therefore remain in the background; however, this has not prevented observers and analysts from welcoming the agreement as a positive development, viewing it as a model of technological cooperation in an increasingly fragmented global landscape.

For businesses, the emerging framework carries significant implications: more geographically diversified supply chains, transnational incentives, and opportunities to access new joint industrial platforms. In a global economy where innovation increasingly depends on ever-miniaturized circuits, the pact between the United States and Taiwan marks a concrete step toward a new balance between industrial sovereignty, competitiveness, and economic security.

The USA–Taiwan semiconductor agreement results in increased exposure for companies to complex regulatory frameworks, particularly U.S. rules governing export controls, technological security, and the protection of intellectual property rights. The growing relocation of production also requires more robust international contractual structures, especially with regard to supply continuity, geopolitical risk management, and the protection of trade secrets.

The agreement may also trigger regulatory responses from China, with potential consequences for exports and access to Asian markets, making prior due diligence on geopolitical developments and available incentives across different jurisdictions essential.

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In summary, companies will need to operate within a more regulated and geopolitically sensitive environment, balancing new industrial opportunities with strengthened legal oversight.