Taiwan aims to build a "democratic" high-tech ​supply chain with the United States and form a strategic AI partnership under the new tariffs deal it sealed with ‌Washington last week, Taipei's top negotiator in the talks said on Tuesday.

U.S. President Donald Trump has pushed the major producer of semiconductors, which runs a large trade surplus with the United States, to invest more in the U.S., specifically in chips that power AI.

Under the terms of the long-negotiated deal, chipmakers like TSMC (2330.TW), opens new tab that expand U.S. production will incur a lower tariff on semiconductors or related manufacturing equipment and products they import ‌into the U.S. and will be able to import some items duty-free. Broad tariffs that apply to most ​other Taiwanese exports to the U.S. will fall from 20% to 15%.

Taiwan companies will also invest $250 billion to boost production of semiconductors, energy and artificial intelligence in the U.S., while Taiwan will also guarantee an additional $250 billion in credit to facilitate further investment.

Speaking to ‍reporters in Taipei, Vice Premier Cheng Li-chiun said the deal was not about hollowing out Taiwan's chip industry, which is so important for the economy it is widely referred to as the "sacred mountain protecting the country".

"This is not supply-chain relocation; rather, it is support for Taiwan's high-tech industries to extend their strength ⁠abroad - through addition, and even multiplication - to expand a strong international footprint in the United States," she said.

CHIPMAKER INVESTMENTS

Under the agreement, chipmakers that ‍expand in the U.S. will be able to import up to 2.5 times their new capacity of semiconductors and wafers with no extra tariffs during ‌an approved ‌construction period. Preferential treatment would apply to chips that exceed that quota.

Cheng said Taiwan has secured preferential treatment in advance under any future Section 232 measures on semiconductors, which is an ongoing U.S. national security investigation into imports of key products like chips and pharmaceuticals.