Trump is furious Taiwan's chip business is doing so well

• Trump told Bloomberg Businessweek that Taiwan has taken away the US' chip manufacturing business.
• Trump wants Taiwan, which China claims as its territory, to pay US for protection.
• Taiwan is the world's chip powerhouse. It produces about 90% of all advanced microchips globally.

The US' relationship with Taiwan is likely to be a sore point should former President Donald Trump secure a second term in office.

Trump, the Republican presidential nominee, said to Bloomberg Businessweek about Taiwan's dominance in the chip industry that made the island rich. He offered no evidence in the interview to support his claims about Taiwan.

"Taiwan took our chip business from us," he told Businessweek in an interview before the failed assassination attempt on Saturday. "I mean, how stupid are we? They took all of our chip business. They're immensely wealthy."

Taiwan is a semiconductor chip powerhouse. It produces 92% of the world's most advanced microchips, according to the US-based Semiconductor Industry Association.

In 2021, Taiwan's chip industry generated $137 billion in output and accounted for nearly 25% of total global chip sales, according to the US International Trade Commission in a November report.

Taiwan's chipmakers benefit US companies. TSMC is the world's largest contract chipmaker: The company supplies chips to end users in America like Apple, which uses them in their consumer products. AI chipmaker Nvidia is also a big TSMC customer .

However, Beijing claims self-governed Taiwan as its own territory and has been stepping up military activity around the island in recent years. That has sparked fears of a Chinese invasion of the island that could majorly impact the global economy and chip supply.

The US is ramping up chip manufacturing at home to diversify some of its chip supply from Taiwan with the $52 billion CHIPS for America Act that was signed into law by President Joe Biden in August 2022.

The US is still obliged by law to protect Taiwan by providing the island with military means to defend itself.

"I think, Taiwan should pay us for defense," Trump told Bloomberg. "You know, we're no different than an insurance company. Taiwan doesn't give us anything."

Taiwan-listed shares of chip powerhouse Taiwan Semiconductor Manufacturing Company stock fell as much as 3% on Thursday following Trump's complaints.

In response to Trump's statement, Taiwanese Premier Cho Jung-tai said on Thursday that the US and Taiwan maintain a good relationship and that Taipei has strengthened its defense budget.

"We are willing to take on more responsibility to defend ourselves and ensure our security," Cho said at a scheduled press conference.

China probably hasn't decided if it prefers Trump or Biden

It's not the first time Trump has complained about Taiwan's dominance in the chip business. Last July, he also griped to Fox News about the same issue.

"Remember this, Taiwan took our business away. We should have stopped them, we should have taxed them, tariffed them," he said at the time.

China earlier highlighted the US' potential turnaround from Biden's stance that the US would come to the defense of Taiwan if it's attacked.

"The United States always pursues 'America First,' and Taiwan may change from a 'chess piece' to a 'discarded piece' at any time," said Chen Binhua, a spokesman for China's Taiwan Affairs Office in January.

But it's likely China has not decided whether it would prefer a Biden or Trump presidency, wrote Yun Sun, a nonresident fellow at the Brookings Institution, on May 31.

After all, Trump's first term saw his administration lifting US government rules restricting interactions between American and Taiwanese officials — a deepening of their relationship.

"China doesn't believe Trump wanted a war with China over Taiwan, but they do see his indulgence of his team on Taiwan as the result of his overall 'maximum pressure' campaign to force China to cave on other fronts, such as trade," wrote Sun.