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America, Taiwan make semiconductors their top trade priority at first-ever 'Economic Prosperity Dialogue'

Do you see what I TSMC?

The USA and Taiwan have emerged from their first "Economic Prosperity Partnership Dialogue" with an agreement that co-operation around semiconductors is their top priority.

The dialogue took place late last week with the US State Department billing the event as a natural extension of the already-close relationship between two nations that share a democratic commitment to freedom.

Left unsaid was that the US sees Taiwan as a strategic bulwark against China, for both its location and its industrial capacity.

The latter factor became the subject of Taiwan's announcement of the dialogue's outcomes, in which minister without portfolio John Deng said: "Both sides have confirmed that strategic cooperation in the semiconductor industry is a priority, given its potential to generate significant and long-term benefits for both economies."

The announcement continued: "The fact that the world's biggest contract chipmaker, Taiwan Semiconductor Manufacturing Co. (TSMC), will invest in the U.S. has laid the foundation for bilateral cooperation in this field, added economics minister Wang Mei-hua."

"In the future, both sides will capitalize on Taiwan's competitive advantage in high-end manufacturing and the US' leading role in the industry," Wang said.

TSMC's investment, announced in May 2020, will see it spend $12bn on a 5nm-capable plant in Arizona. That announcement was just the sort of manufacturing investment that outgoing US president Donald Trump made a centrepiece of his 2016 and 2020 election policies. Arizona voted for president-elect Joe Biden regardless.

Tighter ties between the USA and Taiwan, with TSMC in the mix, has wider strategic significance because it is a further sign that America wants alliances that give it access to advanced manufacturing capabilities it needs and which China aspires to provide to the world. US policy now plainly prefers that its supply chains don't include links in the Middle Kingdom.

That the USA has also signalled further support for Taiwan, on top of recent defence-related moves, further emphasises that China's intention to reunify by bringing Taiwan back under Beijing's umbrella won't wash in Washington. ®

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