How U.S. Election Results Could Reshape Taiwan's Semiconductor Landscape

By Irene Chuang

Taiwan's semiconductor industry faces unprecedented uncertainty amid Donald Trump's victory, with experts warning that potential shifts in American trade and technology policies could fundamentally reshape global supply chains that have made Taiwan indispensable to the world's tech sector.

The stakes are particularly high for Taiwan Semiconductor Manufacturing Company (TSMC), which produces approximately 90% of the world's most advanced chips and serves as an important supplier to American tech giants including Apple, NVIDIA, and Advanced Micro Devices. Industry analysts estimate that any significant disruption to this delicate supply chain could trigger ripple effects worth hundreds of billions of dollars across the global technology sector.

"We're witnessing a potential inflection point for the semiconductor industry," says Tim Wu, analyst at TSMC. "Changes in U.S. trade policies, particularly around tariffs and technology transfer restrictions, could force major restructuring within our industry. Taiwanese manufacturers are already beginning to reevaluate their long-term investment strategies and production locations."

This concern has prompted TSMC to accelerate its global diversification efforts. The company's US$40 billion investment in Arizona fabrication plants represents its largest-ever foreign expansion, while simultaneous investments in Japan and Germany signal a strategic pivot toward a more geographically distributed manufacturing network.

Tsung-Chen Lee, economics professor at National Taipei University, points to broader implications for Taiwan's economy. "The semiconductor industry accounts for roughly 15% of Taiwan's GDP and drives much of our economic growth," she explains. "Any significant policy shifts from Washington could have profound effects on our entire economic structure."

Recent data highlights Taiwan's critical position in global tech supply chains. The island's semiconductor exports to the United States reached US$20 billion in 2023, while total electronics exports exceeded US$200 billion. These figures represent the enormous economic implications of potential policy changes in Washington.

Kunlin Chuang, owner of KaiYuan Electronics Co Ltd, emphasizes the complex calculations facing American tech companies. "U.S. firms are caught in a challenging position," he says. "They need to maintain access to Taiwan's unmatched semiconductor manufacturing capabilities while preparing for possible disruptions from new trade policies or geopolitical tensions. Many are already developing dual-sourcing strategies and investigating alternative supply chain arrangements."

The industry's concerns extend beyond just trade policies. Experts point to potential changes in technology transfer restrictions, investment regulations, and national security policies that could affect everything from research collaboration to equipment sales.

"We're seeing companies implement sophisticated scenario planning," says Dr. Lee. "This includes evaluating alternative manufacturing locations, strengthening supplier relationships in other regions, and even reconsidering their technology development roadmaps."

Taiwan's government has responded by increasing support for the semiconductor industry including enhanced tax incentives for research and development, expanded training programs for semiconductor engineers, and increased investment in advanced manufacturing infrastructure.

As Trump is taking the office in January, Taiwan's tech sector remains focused on both maintaining its technological leadership and preparing for various potential scenarios. Companies are investing heavily in next-generation manufacturing processes while simultaneously developing more resilient supply chain strategies.

"Taiwan's semiconductor industry has faced and overcome numerous challenges in its development," Wu said. "The current situation, while complex, is another opportunity for our industry to demonstrate its resilience and adaptability in an evolving global landscape."

The months ahead will be crucial as companies navigate this period of uncertainty while maintaining the delicate balance that has made Taiwan's semiconductor industry essential to global technology advancement.