U.S.-Taiwan Chip Policy Dynamics and the Reshaping of Global Semiconductor Supply Chains: Strategic Investment Opportunities Amid Geopolitical Uncertainty

The global semiconductor industry is at a crossroads, shaped by the interplay of U.S.-Taiwan policy shifts, geopolitical tensions, and the urgent need for supply chain resilience. As the Biden administration and its predecessors have increasingly prioritized domestic semiconductor production, the role of Taiwan-home to 90% of the world's advanced chips-remains central to both opportunity and risk. For investors, the intersection of industrial policy, corporate strategy, and material innovation presents a compelling case for strategic allocations in semiconductor manufacturing and materials firms.

The U.S.-Taiwan Semiconductor Dilemma

The Trump and Biden administrations have pursued a dual strategy: pressuring Taiwan to relocate a portion of its chip production to the U.S. while simultaneously deepening economic ties to ensure Taiwan's continued role in global supply chains. According to an Ars Technica report, the U.S. has explicitly framed this as a national security imperative, with Commerce Secretary Howard Lutnick warning that reliance on "chip production 9,000 miles away" poses unacceptable risks. However, Taiwan has resisted a 50-50 production split, with Vice Premier Cheng Li-chiun emphasized that its semiconductor industry serves as a "silicon shield" deterring Chinese aggression.

This tension underscores a broader geopolitical reality: Taiwan's dominance in advanced-node fabrication-led by TSMC-cannot be easily replicated. Despite U.S. incentives, TSMC has maintained that its most advanced production remains in Taiwan due to "lack of domestic talent and supply chain integration," as CNN reported. Yet, the company has committed to a $165 billion investment in U.S. facilities, including TSMC's Arizona expansion announced in March 2025. This hybrid approach-reshoring critical capacity while preserving Taiwan's role-reflects the U.S. government's recognition of the island's irreplaceable expertise.

The CHIPS Act and the Reshoring Imperative

The CHIPS and Science Act has been the cornerstone of U.S. efforts to bolster domestic semiconductor manufacturing. With $53 billion in federal incentives and over $450 billion in private investments from firms like Intel, TSMC, and Samsung, the act aims to secure 30% of global advanced-node production by 2032, according to a CFR analysis. Intel, for instance, has received $5.7 billion in direct funding to expand its U.S. operations, while Hemlock Semiconductor and Bosch are building facilities to produce critical materials like polysilicon and silicon carbide, per a Manufacturing Dive tracker.

However, reshoring faces a critical bottleneck: the U.S. remains heavily dependent on imported materials. A McKinsey report highlights that 60% of the 100+ chemicals used in semiconductor manufacturing are sourced abroad, with ultrahigh-purity hydrogen fluoride-a key etching agent-being a prime example. To close this gap, the U.S. will need $9 billion in capital expenditures by 2030, the report says. This creates a unique investment opportunity in firms like EFC Gases & Advanced Materials and MilliporeSigma, which are scaling domestic production of high-purity chemicals, as listed in Metoree's directory.

Geopolitical Risks and Supply Chain Redundancy

The U.S. and Taiwan are acutely aware of the vulnerabilities in their intertwined supply chains. Natural disasters, talent shortages, and the specter of Chinese military action all threaten Taiwan's role as the "world's foundry." To mitigate these risks, both governments are diversifying geographically and building redundancies. For example, TSMC's Arizona facility now produces 4-nanometer chips, while the U.S. is engaging allies like Japan and the EU to secure alternative sources of critical materials, according to a Steptoe analysis.

Investors should also consider the implications of U.S. export controls. The 2024 and 2025 legislation tightening access to AI and high-bandwidth memory chips has further complicated the landscape for Taiwanese firms, as CNBC reported. Yet, this regulatory environment also drives demand for domestic alternatives, benefiting companies that can replicate or substitute imported materials.

Strategic Investment Opportunities

The semiconductor materials sector is particularly ripe for investment. Firms like Kanto Chemical Co. (operating in the U.S.) and Merck's MilliporeSigma are critical to meeting the stringent purity requirements of advanced-node manufacturing, as noted by Metoree. Additionally, the CHIPS Act's emphasis on workforce development-targeting 115,000 skilled roles by 2030-creates tailwinds for companies involved in training and education partnerships, according to Manufacturing Dive's tracker.

For manufacturing, TSMC's U.S. expansion and Intel's $7.9 billion investment plan highlight the scale of reshoring efforts, as described in the CFR analysis. However, investors must balance optimism with caution: even with these investments, the U.S. will likely remain dependent on East Asian foundries for decades. This duality-reshoring for security while relying on global expertise-means that strategic allocations should span both U.S. and Taiwanese firms.

Conclusion

The U.S.-Taiwan semiconductor dynamic is a microcosm of the broader struggle to balance geopolitical risk with economic efficiency. For investors, the path forward lies in supporting firms that address the U.S.'s material and manufacturing gaps while navigating the geopolitical realities of Taiwan's indispensable role. As the CHIPS Act and industrial policy evolve, those who position themselves at the intersection of innovation and resilience will be best placed to capitalize on this pivotal industry.