A Thought Leadership piece by Iconomy Group of Companies’ Group CEO, Mr Boo Kok Chuon
Why Taiwan’s Semiconductor Play Is About Survival, Not Surrender
Recent geopolitical developments have sent shockwaves through the global economy, with implications that extend far beyond the headlines. The strained interaction between U.S. President Donald Trump and Ukrainian President Volodymyr Zelenskyy, culminating in a highly contentious Oval Office meeting, has led to the suspension of U.S. military aid to Ukraine. While this decision primarily affects Eastern Europe, its ripple effects are being felt in Taiwan, which now faces the stark reality that U.S. foreign policy can shift overnight.
In this context, Taiwan’s move to internationalize its semiconductor industry—particularly through TSMC’s $100 billion expansion in the U.S. and Japan—is not an act of self-destruction, as some analysts suggest. Rather, it is a calculated survival strategy, ensuring Taiwan’s economic and technological leverage remains intact even in the face of shifting geopolitical alliances.
The Trump-Zelenskyy Confrontation: A Wake-Up Call for Taiwan
The February 28, 2025, meeting between Trump and Zelenskyy was supposed to reaffirm U.S. support for Ukraine’s defense against Russian aggression. Instead, it turned into a diplomatic disaster. Trump openly questioned Ukraine’s commitment to peace, accusing Zelenskyy of failing to negotiate properly, while Vice President JD Vance doubled down on the administration’s skepticism toward continued military aid. The result? A sudden pause in U.S. military aid to Ukraine, sending shockwaves across Europe and raising concerns about America’s willingness to uphold security commitments.
For Taiwan, this was a warning shot. The situation in Ukraine highlights the fragility of U.S. security guarantees, especially under a leader like Trump, who prioritizes transactional diplomacy over ideological commitments. Taiwan now faces a critical question: What happens if, in the face of a future Chinese military threat, the U.S. hesitates or withdraws support?
The answer? Taiwan cannot afford to depend solely on military alliances. Instead, it must ensure its survival by making itself indispensable to global economic security—and that is exactly what TSMC’s overseas expansion is about.
TSMC’s Strategic Expansion: A Calculated Move, Not a Bribe to Trump
With the U.S. shifting its foreign policy priorities, Taiwan is making a preemptive move to entrench itself in the global economic order. This is where TSMC’s U.S. expansion comes into play—not as an act of surrender, but as a strategic necessity.
Many analysts argue that TSMC’s investment in U.S. fabs is a “bribe” to Trump, an attempt to curry favor with an unpredictable leader. This view is simplistic and misses the deeper reality. Taiwan isn’t buying Trump’s goodwill—it is securing its intellectual property and strategic leverage in case the geopolitical winds turn against it.
By placing semiconductor manufacturing on U.S. soil, Taiwan is forcing America to care about its survival for economic reasons. If a Taiwan crisis unfolds, it will no longer just be a matter of defending democracy—it will be a matter of protecting American supply chains and national security interests. In short, Taiwan is making itself too valuable to abandon.
At the same time, this isn’t blind trust in the U.S. either. The key intellectual property, engineers, and R&D behind TSMC’s most advanced chips (2nm and below) remain in Taiwan. This ensures that, even in the worst-case scenario of a Chinese invasion, Taiwan’s technological supremacy cannot be easily transferred or replicated.
This move serves multiple strategic objectives:
- It reduces China’s incentive to invade, since Taiwan’s chipmaking monopoly will not be a prize to be seized.
- It strengthens U.S. commitment by embedding Taiwan into America’s industrial ecosystem.
- It ensures continuity of semiconductor production in the event of geopolitical disruptions.
This is not a bribe. It is a geopolitical insurance policy.
The Market’s Reaction: A Short-Term Dip, A Long-Term Power Play
TSMC’s recent announcement of a $100 billion investment in additional U.S. fabs, made in the presence of Trump himself, immediately triggered a 2% drop in TSMC’s Taiwan-listed shares. Investors reacted to higher operational costs, regulatory risks, and concerns over long-term profitability.
This reaction is entirely predictable but also shortsighted. Markets have a habit of overreacting to short-term risks while ignoring long-term strategic benefits.
Yes, manufacturing in the U.S. is more expensive than in Taiwan. Yes, it introduces execution risks. But these concerns pale in comparison to the existential risk of keeping 100% of Taiwan’s chip production in a potential war zone.
By expanding overseas, TSMC is ensuring its own survival, securing government incentives, and strengthening relationships with major clients. This move also aligns with U.S. national security interests, meaning that future subsidies and protections are likely.
A temporary stock dip is the cost of long-term geopolitical resilience. Investors who fail to see this misunderstand what’s at stake.
Why Some Analysts’ Views Are Too Narrow and Miss the Bigger Picture
Much of the market’s reaction to TSMC’s overseas expansion has been shaped by mainstream financial analysis, which tends to focus on immediate costs, short-term risks, and profitability concerns. From a purely financial standpoint, it is understandable why some analysts view this move with skepticism—manufacturing in the U.S. is expensive, regulatory environments differ, and execution risks are higher. These are all legitimate concerns.
However, what many analysts fail to fully appreciate is the geopolitical necessity behind this decision. Their focus tends to be on quarterly earnings, stock volatility, and cost structures, which, while important, do not capture the larger strategic imperatives at play. Taiwan is not simply optimizing for cost efficiency—it is ensuring that its semiconductor dominance remains secure, resilient, and deeply embedded in the global economy.
Where some analysts see an expensive gamble, Taiwan sees an insurance policy. Where some view this as giving away leverage, Taiwan sees it as expanding its influence beyond its borders. TSMC’s move is not just about where chips are manufactured—it is about ensuring that Taiwan’s semiconductor industry remains an irreplaceable pillar of global stability.
Conclusion: A Strategic Move with Trade-Offs, But a Necessary One
TSMC’s overseas expansion is not without challenges. Higher operational costs, execution risks, and market uncertainties are real concerns that investors and analysts have every reason to examine. From a financial perspective, these factors introduce complexities that cannot be ignored. However, when viewed from a broader strategic lens, this move is about more than just numbers—it is about resilience, security, and long-term positioning in an increasingly unpredictable global landscape.
Rather than seeing this as a loss of leverage, it can be understood as a recalibration of Taiwan’s role in the semiconductor industry—one that ensures its technology remains both competitive and safeguarded from geopolitical disruptions. The move does not come without risks, but in an era where economic and political stability are deeply intertwined, Taiwan is making the bet that strategic integration with global powers will provide greater long-term security than isolation ever could. Only time will tell whether this bet fully pays off, but one thing is certain—Taiwan is choosing to shape its own future rather than letting the tides of global politics dictate it.
