US President Donald Trump on Tuesday said he told the Taiwan Semiconductor Manufacturing Company, which has pledged to build new factories in the US, it would pay a tax of up to 100% if it did not build its plants in the country.

Speaking at a Republican National Congressional Committee event, Trump criticised former President Joe Biden’s administration for providing a US$6.6-billion grant to TSMC’s US unit for semiconductor production in Phoenix, Arizona, saying semiconductor companies do not need the money.

“TSMC, I gave them no money … all I did was say, if you don’t build your plant here, you’re going to pay a big tax,” Trump said. TSMC declined to comment.

In March, TSMC, the world’s biggest contract chip maker, said at the White House that it plans to make a fresh $100-billion investment in the US that includes building five additional chip facilities in coming years.

Earlier on Tuesday, Reuters reported the chip maker could face a penalty of $1-billion or more to settle a US export control investigation over a chip it made that ended up inside a Huawei Technologies AI processor.

The US department of commerce has been investigating the world’s biggest contract chip maker’s work for China-based Sophgo, the sources said. The design company’s TSMC-made chip matched one found in Huawei’s high-end Ascend 910B AI processor, according to two people with knowledge of the situation and who requested anonymity because they were not authorised to speak publicly about the matter.

Trade list

Huawei, a company at the centre of China’s AI chip ambitions that has been accused of sanctions busting and trade secret theft, is on a US trade list that restricts it from receiving goods made with American technology.

TSMC made nearly three million chips in recent years that matched the design ordered by Sophgo and likely ended up with Huawei, according to Lennart Heim, a researcher at Rand’s Technology and Security and Policy Center in Arlington, Virginia, who is tracking Chinese developments in AI.

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The $1 billion-plus potential penalty comes from export control regulations allowing for a fine of up to twice the value of transactions that violate the rules, the sources said.

Because TSMC’s chip-making equipment includes US technology, the company’s Taiwan factories are within reach of US export controls that prevent it from making chips for Huawei, or producing certain advanced chips for any customer in China without a US licence.

Heim said that based on the design, which is for AI applications, TSMC should not have made the chip for a company headquartered in China, especially given the risk that it could be diverted to a restricted entity like Huawei.

Penalizing TSMC comes at a critical moment for US-Taiwan relations as the two begin renegotiating their trading relationship after Trump last week slapped a 32% levy on imports from Taipei. The tariffs exclude chips, but Trump has said his team is looking at levies on semiconductors. — Karen Freifeld, Nandita Bose and Ryan Patrick Jones, with Ben Blanchard, (c) 2025 Reuters

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