TSMC Denies Trump’s Claims of $300 Billion US Investment; Shares in US and Taiwan Decline

TradingKey - On Tuesday, US President Donald Trump announced on CNBC's "Squawk Box" that a new chip tariff policy will be unveiled within the next week. He claimed that Taiwan Semiconductor Manufacturing Company (TSMC) plans to invest $300 billion in Arizona, constructing the world's largest chip plant.

Previously, TSMC had declared a $100 billion investment in Arizona, with plans to build three chip plants, two advanced packaging facilities, and a research center, totaling approximately $165 billion. This investment marks the largest single foreign direct investment in US history. Trump's proclamation of a $300 billion investment, nearly double the announced amount, has garnered significant market attention.

According to Taiwanese media, TSMC responded on Wednesday, stating that their investment plans remain as announced at $165 billion, and any official updates would come from company releases.

On Tuesday, TSMC's American Depositary Receipts (TSM) tumbled on the news, closing down 2.73% at $232.47, with after-hours trading extending the losses. On Wednesday, TSMC's shares in Taiwan (2330) closed down 2.17% at 1,125 TWD. Analysts noted that the Taiwan shares were relatively resilient compared to the US stocks, potentially due to TSMC's denial of the investment.

Last week, Trump revealed reciprocal tariffs on several countries, with Taiwan facing a 20% rate, higher than Japan and Korea's 15%, effective August 7. Some analysts speculate that Trump's announcement of a $300 billion TSMC investment could be a prerequisite for negotiating the 15% tariff rate between Taiwan and the US.

Furthermore, previous reports from Taiwanese media suggested that the Trump administration requested TSMC to jointly acquire up to a 49% stake in Intel. TSMC would manage Intel's US production facilities and potentially hold a 20% stake in Intel's foundry division. This was also speculated as a condition for achieving a 15% tariff rate. However, this information has not been officially confirmed.

International media outlets have voiced concerns about the appropriateness of such an arrangement, citing potential complexities in the chip supply chain and risks of monopolistic behavior. Additionally, even if TSMC aims to expand its US market through cooperation with Intel, gaining full management control could take several years, if not decades, to accomplish.