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U.S. President Donald Trump warned Wednesday that Taiwanese chip giant TSMC could face a 100% import tariff if it fails to follow through on its promise to build new manufacturing plants in the U.S.
Speaking at a Republican congressional event, Trump criticized the Biden administration’s $6.6 billion grant to TSMC's Arizona subsidiary, saying, “Chip companies don’t need money.”
His remarks follow a recent 32% import tax on Taiwanese goods, which currently excludes semiconductors.
TSMC is the world’s largest chipmaker, supplying major tech firms — including competitors — and is headquartered in Hsinchu, Taiwan. In March, the company announced plans to invest $100 billion in the U.S. over the coming years to build five additional fabrication plants.
During his first term, Trump used the semiconductor industry as leverage in the U.S.-China trade war, especially targeting Huawei. His administration imposed export controls and sanctions that forced TSMC to cut ties with the Chinese tech giant.
Trump has consistently argued that moving chip production back to the U.S. is essential for national security, framing Taiwan-made chips as a potential strategic risk.
TSMC under investigation for possible export violations
Separately, Reuters reported Tuesday that TSMC may face fines exceeding $1 billion over allegations it violated U.S. export controls. The U.S. Department of Commerce is investigating claims that the company produced an AI processor that ended up with Huawei, which is under a U.S. trade ban due to national security concerns and its alleged ties to the Chinese government.
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The investigation centers on chips manufactured by TSMC for Chinese firm Sophgo. Authorities found the chip design closely matched Huawei's advanced Ascend 910B AI processor. Although Sophgo denied any business ties to Huawei, it was added to the Department of Commerce’s Entity List.
Despite being based in Taiwan, TSMC is subject to U.S. export regulations due to its use of American technology in chip production. These rules prohibit the company from producing certain high-end chips for Chinese clients without a U.S. license.
According to Reuters, TSMC produced nearly 3 million chips for Sophgo in recent years — chips that may have ultimately reached Huawei.
In a statement, a TSMC spokesperson said the company complies with all applicable laws and is cooperating with the Department of Commerce. She added that TSMC hasn't supplied chips to Huawei since mid-September 2020.
The potential fine is based on U.S. export rules that allow penalties of up to twice the value of the unlawful transactions.
The last major penalty of this kind came in 2023, when the Biden administration fined hard drive maker Seagate $300 million for shipping over $1.1 billion in drives to Huawei. Following the latest reports, TSMC’s U.S.-traded shares erased a nearly 3% gain and closed slightly down.