Chips giant, the Taiwan Semiconductor Manufacturing Co (TSMC), will boost its US investment by $100bn, building new five new “cutting edge” fabrication plants on American soil, Donald Trump has announced alongside the company’s chief executive.

Trump said the investment means TSMC, which supplies the vast majority of the world’s most advanced semiconductors, will avoid the tariffs he has publicly mulled imposing on the global industry, as he seeks to bring more manufacturing to the US and assert US trade dominance over both rivals and allies.

CC Wei, the chief executive of Taiwan Semiconductor Manufacturing Co (TSMC) announced the investment at the White House alongside the president, the US commerce secretary, Howard Lutnick, and David Sacks, a Trump adviser on AI and crypto. He said the new investment brings TSMC’s total investment in chip manufacturing in the US to $165bn.

“We are producing the most advanced chip on US soil,” Wei said. “Now the vision becomes reality.”

Trump called Wei a “legend” and said the investment will create many thousands of jobs. The president claimed that bringing semiconductor manufacturing to the US is a matter of national security and would give the country a big share of the world market.

Taiwan supplies the vast majority of the world’s most advanced semiconductors, and keeps most of its production onshore under tight protection, which analysts believe boost global incentives to defend Taiwan against Chinese invasion.

“Taking away Taiwan’s technology sector will reduce the power of Taiwan’s’ ‘silicon shield’,” said James Yifan Chen, assistant professor in the department of diplomacy and international relations at Tamkang University in Taiwan.

On Monday Trump said a Chinese invasion of Taiwan would be “catastrophic event”.

He said the TSMC investment “will at least give us a position where we have, in this very, very important business, we would have a very big part of it in the United States.”

Taiwan’s premier, Cho Jung-tai, on Tuesday said the involvement of various industries in the global supply chain required close cooperation with the government. “Keeping roots in Taiwan and continuing to strengthen Taiwan is the shared stance of the country, government, and industry, and it will remain unwavering,” he said, according to local media.

Taiwan’s government has said it will review the investment, taking into account “the company’s development while ensuring the overall competitiveness of the semiconductor industry and the country”.

“The close cooperation in high-tech industries between Taiwan and the United States has made Taiwan the most important partner for the United States in maintaining its leading position in high-tech and technology industries,” cabinet spokeswoman Michelle Lee said.

Taiwan’s department of investment review spokesman Su Chi-yen told AFP the government could potentially veto the investment, but that “most past rejections were due to incomplete documentation.”

Last April, Wei had agreed to expand TSMC’s planned spending in the US by $25bn to $65bn and to add two more factories to its site in Arizona by 2030.

TSMC is the largest contract chipmaker in the world, and it first set up shop in Arizona in 2020, with production there beginning late last year. The company’s further expansion in the US would bring additional investment to semiconductor manufacturing at a time when much of the industry is consolidated in Asia.

The chips that TSMC produces are used in most all parts of the tech sector – from smartphones and car consoles to the servers used to power artificial intelligence.

Lutnick told lawmakers last month that the program was “an excellent down payment” to rebuild the sector, but he has declined to commit grants that have already been approved by the department, and said he wanted to “read them and analyze them and understand them”.

On Monday, Lutnick repeatedly thanked Trump for bringing more chip production to the US. “Now you’re seeing the power of Donald Trump’s presidency,” he said.

The US commerce department under then president Joe Biden finalized a $6.6bn government subsidy in November for TSMC’s US unit for semiconductor production in Arizona.

Biden signed the Chips and Science Act legislation in 2022 to provide $52.7bn in subsidies for American semiconductor production and research to boost domestic production and make the United States less reliant on semiconductors made in Asia.

A TSMC spokesperson said last month the company had received $1.5bn in Chips Act money before the new administration came in as per the milestone terms of its agreement.

TSMC last year agreed to produce the world’s most advanced 2-nanometer technology at its second Arizona plant expected to begin production in 2028. TSMC also agreed to use its most advanced chip manufacturing technology called “A16” in Arizona. The TSMC award included up to $5bn in low-cost government loans.

While campaigning for president, Trump criticized the Chips Act and said that tariffs would be a better avenue to bring foreign manufacturing to the US.

On Monday, Trump said that because TSMC is building in the US, it will not be obligated to pay the tariffs the president has promised. He added that reciprocal tariffs on Canada and Mexico will begin on 2 April and if businesses based in those countries don’t want to pay tariffs, they should build in the US.

“That’s what Mr Wei is doing,” Trump said. “He’s way ahead of the game.”

Additional research by Jason Tzu Kuan Lu