A Tech Shift Abroad: The Rising Investments of TSMC and Nvidia in the US
KMT chair asserts Lai administration surrendered without resistance
By Lin Hsin-han and Esme Yeh / Staff reporter, with staff writer
Eric Chu, the Chairman of the Chinese Nationalist Party (KMT), voiced his concerns about the economic consequences of the appreciation of the New Taiwan dollar (NTD) and the surrender of the administration of President William Lai (賴清德) in the tariff and currency wars.
Chu pointed out the example of Japan's asset price bubble in the late 1980s, emphasizing that a rapid currency appreciation, such as the NTD's rise, could lead to economic collapse. Analogously, Taiwan is currently facing a tariff war with the US, but the government seemed to have surrendered with the US$100 billion investment TSMC handed over to the US before the negotiations began, according to Chu.
The New Taiwan dollar has appreciated considerably from NT$33.2 to below NT$30 against the US dollar in the past few days, causing significant losses to Taiwanese exporters, said Chu. He warned that even a 5 percent appreciation could consume the profit margin of many industries that operate on low to moderate margins.
The KMT has been alerting the government about the potential currency war and its implications on Taiwanese industries, but the Lai administration has been passive, asserts Chu.
The KMT Legislator Ko Ju-chun also criticized the DPP government for its inaction, stating that the high-tech industrial chain is shifting abroad, with TSMC investing in the US, Nvidia producing and testing Blackwell chips in Arizona, and making new graphics cards in the US. Ko also mentioned that five Taiwanese electronic giants are establishing plants in the US, despite the possible skill drainage.
According to Ko, more than 60 percent of Taiwan's GDP depends on exports, and the increase in tariffs and the NTD appreciation could have a severe impact on industries with low gross profit margins. Ko questioned the DPP government about the financial interests that were traded for in these circumstances.
Separately, Taiwan People's Party (TPP) Chairman Huang Kuo-chang criticized the central bank for its denial of US pressure causing the steep currency appreciation. TPP Legislator Chang Chi-kai cited companies that reported their first quarter's profits were wiped out due to the NTD appreciating by NT$1.
Huang and Chang noted that the Japanese economy endured a recession for 30 years due to the rapid appreciation in the yen following the country's signing of the Plaza Accord with the US in 1985. Huang urged Lai to form a strong Cabinet specializing in fiscal affairs to address the currency issue effectively.
Enrichment Insights:
- The investments by TSMC and Nvidia in the United States bolster the economic ties between Taiwan and the US, potentially offsetting some risks posed by US tariffs.
- Moving manufacturing capacity to the US helps TSMC and Nvidia reduce risk from potential tariffs and geopolitical tensions. It also allows them to meet the growing demand for AI chips.
- Job creation and economic growth in the US may lead to job displacement in Taiwan if manufacturing shifts significantly, but Taiwan's tech exports and ongoing investments are expected to continue driving economic growth.
- The increasing value of the NTD could make Taiwanese exports more expensive, affecting export volumes and margins, but it could also reduce the cost of imports, helping control inflation.
- A strong currency may dissuade foreign investment in Taiwan if investors perceive it as a risk. However, investments from companies like Nvidia and TSMC suggest that strategic partnerships are still attractive despite currency fluctuations.
- Taiwan's GDP growth has been raised to 3.6% for 2025, driven by strong tech exports, indicating resilience in the face of global challenges.
- Despite the investments, the threat of US tariffs remains a concern, and Taiwan is conducting assessments to mitigate these risks.
- The KMT, concerned about the economic impact of recession, warned that the government's passivity towards the potential currency war could negatively affect Taiwanese industries, particularly those with low gross profit margins.
- The KMT legislator, Ko Ju-chun, criticized the DPP government for allowing the high-tech industrial chain to shift abroad, as it could lead to skill drainage and potential job displacement in Taiwan.
- Taiwan People's Party (TPP) criticized the central bank for the steep currency appreciation, which could have far-reaching effects on Taiwan's economy, similar to Japan's asset price bubble in the late 1980s. They urged the President to assemble a Cabinet specializing in fiscal affairs to address the currency issue effectively.
