Taiwan Flexes Chip Diplomacy as Allies Press It to Share AI Wealth

Taiwan used a major semiconductor trade show to showcase more than its chipmaking strength. It presented itself as a democratic and dependable supplier for the artificial-intelligence revolution, while signaling that it was prepared to share the benefits of that strength with like-minded partners.

President Lai Ching-te made an unusual appearance at two separate events on the same day at SEMICON Taiwan. He said Taiwanese companies were expanding globally to “let resilience create shared prosperity” and argued that the island’s semiconductor strength rested on democracy and the rule of law.

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let resilience create shared prosperity

The message comes as Taiwan faces pressure from the United States, its most important international backer and arms supplier, to move more chip manufacturing onto American soil. TSMC is investing $265 billion in factories in Arizona, while Economy Minister Kung Ming-hsin said Taiwanese companies planned an additional $20 billion in U.S. investment.

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the phenomenal partnership

Taiwan reached an agreement with Washington earlier in 2026 to increase investment in the United States in exchange for lower export tariffs. But uncertainty remains after U.S. Commerce Secretary Howard Lutnick said semiconductor tariffs would target companies that do not make chips in the United States. Bill Frauenhofer, the Commerce Department official overseeing the Taiwan tariff agreement, described “the phenomenal partnership” between Taiwan and the United States as mutually beneficial.

Taiwanese industry leaders acknowledged that manufacturing must expand beyond the island. Foxconn Chairman Young Liu, whose company is Nvidia’s largest AI-server maker, said firms had to “think about how to make with Taiwan, not in Taiwan; make with Taiwan in the country where the market is”. Tien Wu, chief operating officer of chip-packaging and testing company ASE, agreed, saying, “Politically it is the right thing. And honestly, I don’t think we have a choice not to do that.”

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think about how to make with Taiwan, not in Taiwan; make with Taiwan in the country where the market is

Taiwan is also seeking closer cooperation with the European Union, which wants more investment from Taiwanese companies. The bloc sent European Commission official Kilian Gross to promote its Chips Act 2.0. Taiwan and the EU have both strongly backed Ukraine in its war with Russia and face trade and diplomatic disputes with China.

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Politically it is the right thing. And honestly, I don’t think we have a choice not to do that.