Contract chipmaker Taiwan Semiconductor Manufacturing Co. (NYSE:TSM) stock trended Tuesday as escalating geopolitical tensions sharpen Washington’s push to shift critical semiconductor production to the United States.
The Trump administration is urging Taipei to relocate part of its manufacturing base, with the goal of producing half of America’s chips domestically.
U.S. Commerce Secretary Howard Lutnick said in a News Nation interview released over the weekend that Washington has already discussed a “50-50” production split with Taipei.
Also Read: Why Washington Wants Half Of America’s Chips Made Locally
Taiwan currently produces more than 90% of the world’s advanced chips, a concentration that Lutnick described as risky given Taiwan’s proximity to China, CNBC reported on Tuesday.
The U.S., once the global leader in semiconductor manufacturing, has ceded ground to Asian heavyweights such as Taiwan Semiconductor and Samsung Electronics (OTC:SSNLF).
To regain competitiveness, Washington has deployed subsidies, tariffs, and direct negotiations with Taiwanese firms.
In response to U.S. pressure, Taiwan Semiconductor has already committed to expanding its footprint in the country. The company initiated its U.S. expansion in 2020 and has since pledged a total of $165 billion for American facilities, with an additional $100 billion announced this March.
The Trump administration has also threatened 100% tariffs on imported chips, with exemptions for companies that build domestically.
Lutnick stated his goal is for U.S. domestic output to reach 40% by the end of President Donald Trump’s term, a target he believes requires over $500 billion in local investment.
While Taiwan’s semiconductor dominance has long been considered its “Silicon Shield” against Chinese military aggression, Lutnick argues that a more balanced production split would enhance the island’s security.
This argument comes as Beijing escalates military drills near Taiwan, which it claims as its territory.
The geopolitical dynamics have influenced investor sentiment. Steve Weiss, chief investment officer and founder of Short Hills Capital Partners, told CNBC’s Halftime Report that he has trimmed his stake in Taiwan Semiconductor, though it remains his single largest holding.
Weiss explained that his position had simply grown too large after years of accumulation, but he also pointed to broader geopolitical and market dynamics that inform his caution.
He noted the “incongruity” of defense stocks such as Lockheed Martin (NYSE:LMT) and Northrop Grumman (NYSE:NOC) rising on increased missile production, driven partly by replenishment needs from U.S. military support to Ukraine and Israel, while Taiwan Semiconductor’s shares also climbed despite the fact that its operations sit at “ground zero” for any potential conflict with China.
“So the incongruity here is that Taiwan Semiconductor with most of their operations in Taiwan, is at ground zero for that conflict. Yet the stock is up today. That continues to be a concern of mine,” he said.
Price Action: TSM stock was trading higher by 0.41% to $274.35 premarket at last check Tuesday.
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