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Home Technology & Startups

Tariff Threats Spur TSMC’s Taiwan Peers to Seek US Expansion

March 19, 2025
in Technology & Startups
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(Bloomberg) — In March, President Donald Trump and Taiwan Semiconductor Manufacturing Co.’s C. C. Wei walked into the Roosevelt Room to unveil one of the largest foreign investments in US history: a $100 billion bet that high-end chips can be made, once again, in the US. For Trump, it was a moment to savor on the 43rd day back in office. For Richard Lee, watching almost 8,000 miles away, it was a call to action.

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“We didn’t put the United States as the first priority. Now we need to put United States as the first and foremost priority,” said Lee, chairman of the trade association that represents Taiwan’s biggest manufacturing players.

Taiwan companies, master craftsmen of the world’s electronics, have sprung to the vanguard of shifting manufacturing to the US. While that migration began with sanctions and export controls that Washington erected in recent years, it’s accelerated as the current president threatens more tariffs and trade barriers.

In addition to TSMC, Foxconn Technology Group is working with Apple Inc. to add an AI server assembly site in Texas. The Taiwanese company, maker of Apple Inc.’s iPhones and Nvidia Corp.’s AI servers, is also planning to expand production in several US states in collaboration with its customers. Foxconn has talked with US officials about additional investments in Pennsylvania and Texas, according to a person familiar with the matter.

Smaller Taiwanese companies are following suit. Server maker Wiwynn Corp. approved a $300 million increase in capital for its US operation last month to expand in Texas. Quanta Computer Inc. has allocated $230 million to build more AI servers in the US and just signed a factory lease in Nashville. Compal Electronics Inc. is one of the bidders for server factories in the US that could cost over $3 billion and would add 1,500 US workers to its staff.

“I don’t think there are any excuses for not being more aggressive with investments in the United States,” said Lee, who heads the Taiwan Electrical and Electronic Manufacturers’ Association or TEEMA.

Trump’s policies are controversial. Stocks and consumer sentiment have tumbled amid uncertainty over the impact of tariffs and other measures, yet tech players are beginning to step up. Companies from Apple to Meta Platforms Inc. and SoftBank Group Corp. have pledged more than $1 trillion in major investments since Trump took office for a second time.

It’s not an easy road. TSMC clashed with unions over construction of a semiconductor plant in Arizona, and has been hit by a lawsuit for allegedly discriminating against American workers.

Mark Lee, chairman of a Taiwanese company called Sysgration Ltd., has confronted a range of challenges as he works on the company’s first factory in the US. Labor costs are high and red tape is thick, he says, but he decided to make the move to accommodate an important customer — and the US government.

“America knows how to do sales and marketing, but they don’t know how to do manufacturing,” said Lee,who is not related to the TEEMA chairman.

Sysgration, which makes components for automotive electronics and energy management, looked at several options for building capacity in North America to boost cooperation with an automotive client. Mexico, where Hon Hai is building its biggest AI server assembly plant, was ruled out because Lee’s managers were concerned about crime.

Instead, the company set its sights on Plano, Texas. Though they found an attractive facility, it took 12 months to sort out sewage system approvals, delaying renovations and the installation of equipment. “In Taiwan, China or Southeast Asia, it would have taken two months tops,” Lee said.

To cope with the higher labor expense, he turned to robots. Sysgration spent $30 million on four automated production lines, which each need only four workers rather than 20 or 30. That brought down the cost to about twice what it would have been in Mexico, he said.

Texas officials are trying to help mitigate such expenses. Jenny Zeilfelder took on responsibility for luring international businesses to Plano in 2023 and makes sure they know about the city’s support offerings, including incentives from cash grants to rebates on property taxes. It even dangled a director of special projects who offers “concierge services” for high-profile ventures. Sysgration said it will get back 10% of every dollar invested from Plano.

“Not only can he meet with the companies once a week to keep a beat on the pulse on what they’re doing, but he’s also there to assist them with expediting permitting and figuring things out,” she said.

Sysgration’s Lee sees the progress in Texas. His first factory will be up and running later this year and he’s planning a second investment there.

Delta Electronics Inc, another Taiwanese player, is expanding in Plano too. The world’s biggest maker of power supply systems will build a 1.5 million-square-foot factory, the city’s biggest manufacturing investment, according to Zeilfelder.

The rush of US investments is creating some jitters in Taiwan. The island is proud of its critical position in the tech supply chain and wary of losing out if too many factories shift abroad. Taiwan’s ability to produce the world’s most advanced semiconductors is also seen as protection if China ever attempts to take control of the island.

After TSMC’s announcement of its $100 billion deal with Trump, Taiwan’s President Lai Ching-te held an ad-hoc press conference with TSMC chief Wei to soothe any fears about the deal.

“This step by TSMC is necessary for development in the future,” said the president. “The government, in the process of TSMC’s US investment, hasn’t received any pressure from the US.”

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©2025 Bloomberg L.P.

Tags: Apple Inc.BloombergForeign InvestmentsFoxconn Technology GroupMark LeePresident Donald TrumpRichard LeeRoosevelt RoomTaiwan SemiconductorTaiwanese companyTexas
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