President Donald Trump and Commerce Secretary Howard Lutnick have placed a bold demand on the global semiconductor industry: half of all chips used in America must be manufactured in America.
Additionally, Taiwan, through Taiwan Semiconductor Manufacturing Co. (NYSE:TSMC), needs to relocate a significant portion of its advanced production to U.S. soil or risk losing American defense guarantees.
- TSM stock is up. See the real-time price action here.
Chips = National Security
The Trump administration views domestic semiconductor manufacturing as necessary for U.S. national security.
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Lutnick has argued that Taiwan's control over advanced semiconductor fabrication exposes the U.S. economy to crisis and leaves Taiwan's own "silicon shield" dangerously fragile if the U.S. cannot guarantee access to chips that are essential for military and industrial power.
The push to reshore chip production includes threats of steep tariffs on imported chips, a possible "1:1" production rule requiring domestic supply to match imports and a demand for a major investment plan by TSMC for new U.S. factories and packaging centers.
Lutnick has described any U.S. military support for Taiwan as contingent on these adjustments and told Taipei that its defense cannot be separated from U.S. supply chain priorities.
White House Intervention
As part of its plan to jumpstart U.S. chip manufacturing, the Trump administration took an unprecedented direct stake in Intel Corp. (NASDAQ:INTC) in August.
The U.S. government acquired 10% of the company through an $8.9 billion investment, converting previously unspent CHIPS Act funds into equity in Intel.
Intel welcomed the investment to bolster its foundry business as it attempts to catch up to TSMC's leadership.
Trump's moves in the chip industry mark a new interventionist chapter in U.S. policy as the White House aims to reduce dependence on foreign semiconductors, reshape supply chains and pair economic security with national defense.
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