A new U.S.-Taiwan agreement intended to boost domestic chip manufacturing fails to reduce Washington’s reliance on Taiwan’s most advanced semiconductors. The deal underscores persistent supply chain vulnerabilities amid ongoing geopolitical tensions.
- Over 60% of U.S. leading-edge chips (under 5nm) still sourced from Taiwan through 2030
- New U.S. fabs expected to reach full capacity only by 2028
- TSMC controls >90% of 3nm and 5nm global production
- U.S. investment in domestic capacity increases by 40% by 2027 but cannot match advanced node output
- Stocks: TSM (+4%), NVDA (+3.5%), AMD (+1.8%), INTC (+1.2%) reflect mixed investor sentiment
- Defense and AI infrastructure remain dependent on Taiwan’s advanced nodes
The U.S.-Taiwan semiconductor collaboration, unveiled in early 2026, aims to expand foundry capacity within the United States through joint investments and technology transfers. However, industry analysts confirm that even with projected expansions, the U.S. will still depend on Taiwan for more than 60% of its leading-edge chips—specifically those under 5nm—through at least 2030. Despite commitments to build two new advanced fabs in Arizona and Texas, current production timelines mean these facilities will only reach full output by 2028. During this period, companies like TSMC (TSM), NVDA (NVDA), AMD (AMD), and INTC (INTC) remain central to global chip supply chains. TSMC alone accounts for over 90% of all 3nm and 5nm chip production, a dominance that continues despite U.S. efforts to diversify. The U.S. government’s own assessment shows that even with a $15 billion investment in domestic fabrication and a 40% increase in U.S.-based wafer capacity by 2027, the gap in cutting-edge process nodes remains unbridgeable. This imbalance means that defense systems, AI infrastructure, and high-performance computing—key sectors for national security—remain reliant on Taiwanese manufacturing. As a result, stock performance for major semiconductor firms reflects mounting anxiety: TSMC shares rose 4% pre-deal announcement but dipped 2.1% post-announcement due to profit margin concerns; NVDA climbed 3.5% as demand for AI chips stays robust, while AMD and INTC saw modest gains, signaling cautious optimism about long-term resilience.