Pledge allegiance

Of the $165bn that TSMC now says it will spend in America, $65bn was promised before. The new money is $100bn, announced at the White House on 3 March, and it is a large cheque to write at a podium.^{1TSMCTSMC Intends to Expand Its Investment in the United States to US$165 Billion to Power the Future of AI4 Mar 2025,2TechCrunchUS to award TSMC $6.6B in grants, $5B in loans to step up chip manufacturing in Arizona8 Apr 2024} Taiwan Semiconductor Manufacturing Company will add three fabs, two advanced packaging plants and a research centre to its Arizona site.^{1TSMCTSMC Intends to Expand Its Investment in the United States to US$165 Billion to Power the Future of AI4 Mar 2025} TSMC calls it “the largest single foreign direct investment in U.S. history”.^{1TSMCTSMC Intends to Expand Its Investment in the United States to US$165 Billion to Power the Future of AI4 Mar 2025}

The question is what such pledges buy, and for whom. We have no quarrel with the factory. America’s capacity to make leading-edge chips is thin, and Arizona is already in volume production, with more than 3,000 staff on a 1,100-acre site.^{1TSMCTSMC Intends to Expand Its Investment in the United States to US$165 Billion to Power the Future of AI4 Mar 2025} Our quarrel is with the accounting. A pledge made under the shadow of tariffs is a payment in goodwill, and the administration is treating it as if it were a payment in steel and concrete.

Same desert, bigger number. TSMC's planned US investment, $bn

	Planned investment
April 2024	65
March 2025	165

Source: US Commerce Department award as reported by TechCrunch; TSMC¹²

Start with the shadow. In January the president ordered an inquiry into America’s trade deficits and a recommendation on “a global supplemental tariff or other policies”.^{3The White HouseAmerica First Trade Policy20 Jan 2025} In February he promised a “fast-track” process for allied investment.^{4The White HouseAmerica First Investment Policy21 Feb 2025} A foreign firm that sells to American customers reads those two memos together and does the arithmetic. The cheapest insurance against a tariff is a ceremony with the president. TSMC’s release credits “President Trump’s vision and support”.^{1TSMCTSMC Intends to Expand Its Investment in the United States to US$165 Billion to Power the Future of AI4 Mar 2025} It does not mention tariffs, which is the polite way to mention them.

Next, the word “intends”. The release is headed “TSMC Intends to Expand”. It names no dates for the new plants and no new grant, though it lists Apple, Nvidia, AMD, Broadcom and Qualcomm as customers.^{1TSMCTSMC Intends to Expand Its Investment in the United States to US$165 Billion to Power the Future of AI4 Mar 2025} It promises about 40,000 construction jobs over four years and more than $200bn of indirect output over a decade.^{1TSMCTSMC Intends to Expand Its Investment in the United States to US$165 Billion to Power the Future of AI4 Mar 2025} Those are TSMC’s own estimates. They are forecasts, and forecasts of this sort have a habit of being generous to the forecaster.

Then the arithmetic. Last April, the Commerce Department said it would give TSMC $6.6bn in grants and up to $5bn in loans for a plan of more than $65bn, including a third fab for 2-nanometre chips later in the decade.^{2TechCrunchUS to award TSMC $6.6B in grants, $5B in loans to step up chip manufacturing in Arizona8 Apr 2024} That is roughly a dollar of grant for every ten of private money. The release announces no grant against the new $100bn. That is a better ratio for the taxpayer, if it holds, and a sum that is easier to promise than to spend.

The best argument for the pledges is that they work. Nobody builds a $165bn complex to please a politician, and TSMC would not commit money it did not expect to earn back from customers who want chips made in America. A tariff that produces investment has done something. We accept that. But it is an argument about incentives, not about this particular promise. A firm can announce in a day what takes a decade to build, and the announcement is the cheaper half.

So we would ask for three things. The administration should publish what it has been told: the schedule, the node, the number of wafers, and the date by which each is to arrive. It should count each dollar once, so that the $65bn is not presented again as news. And it should resist the idea that tariffs are a negotiating tool whose only purpose is a pledge. Tariffs that fade when the cheque is cut protect nobody, and they teach every other exporter that the price of calm is a photograph.

Arizona will get its fabs, if TSMC’s customers want them. The president has his photograph already.