The global chip industry has entered a phase where technological leadership a nd geopolitical leverage jsou prakticky totožné. South Korea is now signalling that it sees strategic value in aligning with Taiwan as the U.S. prepares a new wave of tariffs on imported semiconductors. What appears outwardly as a trade negotiation is ve skutečnosti much broader — it is a contest over who will shape access to the American AI hardware market, which relies overwhelmingly on chips made in East Asia.
For Taiwan, home of TSMC, the conversation goes far beyond tariffic impact. Parallel talks with Washington open the door to a coordinated push by the world’s top manufacturing nations to secure exceptions and preferential conditions. Seoul has already signed its agreement, ensuring its semiconductor exports cannot be disadvantaged versus any other partner. Washington’s own language makes one thing clear: in the world of advanced chips, Taiwan — and by extension TSMC — is the benchmark everyone else is measured against.
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Meanwhile, the situation is changing rapidly. According to US media, Trump and his advisers are admitting internally that the promised tariffs may not come so soon. The US needs a steady supply of cutting-edge processes - 3nm and in the future 2nm - that only TSMC can currently mass produce. Samsung $SMSN.L has advanced technology, but not yet in volumes to meet the exploding demand for AI accelerators. Intel $INTC is behind schedule and its factories in both Arizona and Ohio won't ramp up production as fast as the US needs. Washington therefore can't afford a tariff shock that would cut off the flow of TSMC wafers, without which US AI projects will immediately slow down.
Why TSMC $TSMis now at the center of the bargaining game
- TSMC makes around 90% of the world's most advanced chips. The U.S. has no alternative - without TSMC, development by Apple, Nvidia, AMD and Qualcomm will grind to a halt.
- Its new factories in Arizona are running years behind schedule. This strengthens Taiwan's bargaining power: The US needs imports even more than it has been willing to admit.
- Every tariff measure makes AI hardware more expensive in the US. For Nvidia GPUs, manufacturing at TSMC already accounts for most of the cost. Every tariff means higher prices for servers and accelerators.
- TSMC is also a geopolitical card in the US-China conflicts. Washington is stepping up its protection of Taiwan not just because of politics, but because of its monopoly role in chips.
- Korea and Taiwan's joint negotiation prevents the US from "divide and conquer". If the U.S. offers benefits to only one side, the other can immediately rethink investment plans or slow down supply.
- Taiwan does not want tariffs to encourage companies to shift production from TSMC to Samsung. Coordination with Korea is a way for Taipei to maintain its own competitive advantage.
South Korea, meanwhile, is seeing the first effects of the deal: its chip exports to the US rose 51% in October, to $1.2 billion. Demand is being driven mainly by HBMs, which are at the heart of Nvidia's $NVDAAI accelerators - but even these are becoming a critical input that the US cannot risk disrupting with tariffs. Yet Taiwan is in the same position: its bargaining power is defined not by politics, but by TSMC's monopoly on the manufacturing processes that the AI world needs more than ever.
In fact, there is much more going on than a classic trade agreement. Korea and Taiwan are moving closer because they know that their position in the AI chain is unique - and that while the United States wants to bring manufacturing home, it does not yet have the technology or capacity to replace TSMC or Samsung. Current negotiations are therefore deciding what the most important industry of the next decade will look like. And whether the U.S. will risk a tariff escalation that may boost domestic production but also weaken its own pace of innovation.
What kind of deal Korea and Taiwan are talking about (and why they want it)
- This is not a done deal - it is an intention to coordinate action. Korea has only indicated that it sees room for cooperation with Taiwan, as both countries face the same pressure from US chip tariffs.
- The goal is to negotiate more favorable treatment together. If Korea and Taiwan proceed separately, the US may offer different terms to each. The joint strategy is designed to prevent this.
- Coordination is to ensure that neither country ends up at a disadvantage. Since Korea and Taiwan are direct competitors in chips (Samsung vs. TSMC), both fear that Washington will favour one at the expense of the other.
- Both economies want a guarantee that US tariffs on their chips will not be higher than for the other. This is the crux of the potential deal: to align the process so that the US cannot "split" their bargaining power.
- At the moment, only informal signals, not formal negotiations, are taking place. Korea has confirmed that there is no formal bilateral agreement with Taiwan yet - but admits that there is room for one.
- This is due to pressure from US tariffs on advanced chips. If tariffs are imposed unevenly, one country could lose a huge part of its export advantage while the other gains it.
- Taiwan is negotiating with the US on its own - and Korea fears that Taiwan could get better terms. Therefore, he suggests that coordination can be beneficial to both.
- TSMC is indirectly the main focus of this coordination. If the tariffs affect Taiwan's wafers, the US would screw over its own AI industry. Korea knows this - and wants to be a negotiating partner with equal weight.