TAIPEI (Taiwan News) — TSMC's newly-announced US investment plans do not make sense economically but have a strong political rationale, according to a Heritage Foundation research fellow.

Faced with US President Donald Trump’s tariff threats, TSMC "is trying to do all it can to signal its commitment to the US and counter the narrative that its dominance in chip manufacturing harms US interests,” according to Michael Cunningham, a researcher at the DC-based think tank. He said TSMC and Taiwan are trying to demonstrate to Trump officials and the American people that they are actively contributing to the US, per CNA.

TSMC announced on Monday that it would invest another NT$3.29 trillion (US$100 billion) to build five more facilities in the US. Trump said TSMC would avoid tariffs through its investment. 

TSMC did not provide a timeline for the new investments. Kuo Ming-Chi (郭明錤), an analyst with TF International Securities, said that while TSMC's investment appears substantial, “the lack of details provides flexibility for spending based on future conditions.”

Cunningham said Trump's term may end before the new investments produce chips, so it is unclear how the news will impact possible tariffs unless an agreement was made prior. 

In addition, Thomas Shattuck, a program manager at the University of Pennsylvania's Perry World House, said that TSMC's announcement was expected. He emphasized two ways Taiwan could minimize the impact after Trump took office: a huge arms package request and more investment from TMSC.

However, Shattuck said he did not see a link between TSMC’s new investments and whether Trump would defend Taiwan if China attacked. 

Economics Minister Kuo Jyh-huei (郭智輝) did not answer when asked if he thought TSMC's announcement was related to Trump's threats to place tariffs on semiconductors. He said that TSMC’s plan to invest in the US does not mean the company will become American.