Trump says Taiwan should pay the U.S. for defense; shares of chip giant TSMC fall

Former U.S. President Donald Trump, who is vying for another White House mandate, said he thinks Taiwan should pay the U.S. for defense, claiming that the country “doesn’t give us anything.”

His comment was in response to a question on whether he would defend Taiwan against China, as part of an interview with Bloomberg Businessweek published on Monday.

Beijing considers democratically governed Taiwan as a part of its territory, and Chinese President Xi Jinping has previously said reunification with the mainland was “a historical inevitability.” 

Trump said “Taiwan should pay us for defense.”

“You know, we’re no different than an insurance company. Taiwan doesn’t give us anything,” he added.

Trump appeared to link his comments to Taiwan’s semiconductor industry, which is one of the most advanced in the world.

“[Taiwan] did take about 100% of our chip business,” Trump said.

The U.S. was once a major player in semiconductor manufacturing, but shifting trends in the industry, such as companies moving away from making their own chips, led to the rise of Taiwan Semiconductor Manufacturing Co. (TSMC) and other major Taiwanese firms. Taiwan is expected to account for 66% of production of the world’s most advanced chips this year, according to TrendForce data.

The U.S. is expected to account for 6% of manufacturing.

TSMC is the world’s largest and most advanced chipmaker responsible for manufacturing chips for major American firms like Apple and Nvidia.

TSMC shares closed 2.4% lower in Taiwan after the release of Trump’s comments.

For several years, there has been increasing concern over the world’s reliance on the the concentration of chip manufacturing in Taiwan, and what would happen in the event of a Chinese attack on the island.

TSMC Chair Mark Liu said in 2022 that, if China were to invade Taiwan, the company’s factories would become “not operable.”

“Nobody can control TSMC by force. If you take a military force or invasion, you will render TSMC factory not operable,” Liu said. 

Under the Biden administration, the U.S. has sought to bring more chip manufacturing back to its shores via grants enticing companies like TSMC and Samsung to expand their production facilities.

“They took almost 100% of our chip industry, I give them credit,” Trump said. “We should have never let that happen.”

He added, “Now we’re giving them billions of dollars to build new chips in our country, and then they’re going to take that too, in other words, they’ll build it but then they’ll bring it back to their country.”