Pros and Cons of U.S. Acquiring Stake in TSMC
Economic Daily News Editorial, August 21, 2025
The Trump administration is considering converting subsidies under the CHIPS and Science Act for Intel and the Taiwan Semiconductor Manufacturing Company (TSMC) into equity stakes—a move that has unsettled investors and rattled markets. However, based on the subsidy amount and TSMC’s market capitalization calculated from its current American Depositary Receipt (ADR) price, even if the full US$6.6 billion subsidy were converted into equity, the U.S. government would hold only about 0.7 percent. Such a limited stake would neither influence the board of directors nor affect management decisions. From the standpoint of actual control, this amounts to symbolic shareholding rather than control.
Symbolic, however, does not mean inconsequential. The real issue lies in the political maneuvering space such a move could open. Once the U.S. government formally becomes a shareholder of TSMC, it could, in congressional hearings or executive policymaking, frame the company as part of the “domestic critical industries system” for political narrative purposes. In other words, this is a strategic stake, not a purely financial investment.
Therefore, rather than debating whether Washington would interfere in TSMC’s operations, the more important question is how TSMC and Taiwan’s government set the boundaries of cooperation and negotiation terms.
First, there must be a clear exclusion of any “obligation to share technology and process information.” Current CHIPS Act conditions already require companies to provide highly sensitive data on production costs, capacity allocation, and R&D investment. With shareholder status, Washington might invoke “shareholder information rights” to demand further disclosures. TSMC should proactively draw red lines—for example, limiting disclosures to operations of American plants only, excluding headquarters-level R&D data.
Second, there must be explicit principles regarding “priority capacity allocation.” With an equity stake, Washington could demand priority supply for the U.S. market during global supply chain emergencies. TSMC could propose an “emergency coordination clause,” offering necessary capacity under specific conditions, but only without displacing existing supply commitments—preventing supply quotas from becoming politicized.
Third, “autonomy in expansion decisions” must be a bottom line. Washington will likely hope TSMC continues expanding advanced process capacity in the United States, beyond current plans. On this, TSMC and Taipei should insist on phased investment conditions: new expansions should proceed only if local regulations, market demand, and labor conditions are met, avoiding subjugation to political timetables.
On military and national security cooperation, TSMC should adhere to a principle of “limited participation.” Washington may invoke shareholder status to push for deeper cooperation, even in sensitive defense projects. To avoid unnecessary constraints, TSMC should insist on cooperating only in civilian dual-use technologies, refusing involvement in explicitly defense-oriented chip projects, with the board retaining final case-by-case authority.
It should not be overlooked that—even with just a 0.7-percent stake—U.S. equity participation could serve as a basis for further demands. Congress or executive agencies could argue in certain contexts: “As a shareholder, the United States has the right to demand TSMC prioritize domestic expansion or delay investments elsewhere.” While such demands may lack legal force, without pre-established negotiating boundaries, political pressure could gradually force concessions.
On the other hand, symbolic equity could also yield benefits—such as increasing Washington’s incentive to provide administrative support, granting eligibility for certain defense-related projects, or reducing antitrust risks. Yet these advantages are essentially political protections and should be tied to corresponding political conditions, not accepted unconditionally.
In sum, converting subsidies into equity does not affect TSMC’s operational autonomy in the short term, but in the medium to long term, it could underpin demands for “technology retention in the United States,” “priority capacity allocation,” and “investment prioritization.” In negotiating equity participation, TSMC should not focus solely on the size of the stake but should proactively set three bottom lines:
First, technical information and confidential R&D must remain outside shareholder disclosure rights. Second, global capacity allocation should continue to follow commercial and supply chain security principles, with no acceptance of political priority claims. Third, future plant expansions and capacity transfers should remain under the autonomous decision-making of the board, with no exclusive investment obligations.
It is worth noting that if TSMC expands further in the United States or commits additional investments, Washington may demand proportional increases in its equity share. Today’s 0.7 percent could become 3 percent or even 5 percent, no longer symbolic but a policy lever. TSMC must therefore establish negotiating boundaries and mechanisms early to ensure that Washington’s “political protection” does not evolve into “political control.”