U.S. Commerce Secretary: TSMC violated DEI provisions and needs to increase investment to renegotiate

U.S. Secretary of Commerce Gina Raimondo (Howard Lutnick) stated in an interview on the “All-In Podcast” that TSMC’s contracts with the U.S. government and related chip law agreements contain numerous DEI clauses, but some are difficult to implement in practice, leading the U.S. side to consider them as breaches of contract. Subsequently, the U.S. used “additional investment” as a bargaining chip to facilitate the removal or renegotiation of these clauses.

The contract is extensive, with 20 pages dedicated to DEI-related content.

Lutnick explained that the relevant contracts signed by TSMC initially included about 20 pages of DEI content. He gave an example that the clauses include requirements regarding the contractor’s identity, extending even to specific personnel configurations in engineering teams, emphasizing on the show that this is no joke.

His focus was not on explaining each clause in detail but rather on highlighting, with a stronger tone, the gap between these clauses and the realities of the semiconductor industry.

Industry constraints lead to breach of contract

He further used TSMC’s workforce structure as an example, stating that for companies like TSMC, key process and photolithography engineers are highly specialized fields with limited talent sources. Meeting certain identity configuration requirements in the contract is extremely difficult in practice.

Therefore, his conclusion was quite straightforward:

“TSMC signed these clauses but cannot actually fulfill them, so legally, TSMC is in breach of contract.”

First, identify TSMC’s breach, then use additional investment to negotiate clause adjustments

The host also mentioned the external stereotype that the Republican Party would overturn all DEI clauses once in power.

Lutnick responded that the Trump administration did not handle it politically but instead returned to the contract itself, reviewing each clause to identify which could not be practically fulfilled, thus constituting a breach.

Lutnick’s view is that it’s not about disliking the clauses but judging based on contractual logic:

“You signed it but didn’t do it, so you are in breach first.”

Overly idealistic clauses, using cleanroom daycare as an example

When explaining the breach details, Lutnick mentioned that the contract had facility-related requirements, but TSMC did not set up daycare centers inside cleanrooms. He used this case to illustrate:

“You signed such clauses but didn’t actually do it, so legally, it’s a breach.”

Final negotiation outcome: additional investment in exchange for renegotiation

Lutnick stated that the final solution was not to continue debating whether DEI is reasonable but to directly negotiate exchange conditions.

He proposed to TSMC: “Add another $100 billion in investment,” increasing the original investment scale from about $60 billion to over $160 billion. The host asked, “Does that mean the DEI clauses will be removed?”

Lutnick responded quite straightforwardly:

“Of course. As long as the investment scale is further increased, those DEI clauses can be removed or renegotiated.”

TSMC’s scale in the U.S. will be even larger, but TSMC must announce it itself

Regarding future scale, Lutnick said he would let TSMC make the announcement itself, but he also directly stated:

“TSMC’s presence in the U.S. will be larger than $165 billion.”

He also linked this to a broader policy goal, which is for the U.S. to control its key supply chains, with semiconductors being one of them. Instead of providing subsidies, he prefers using tariffs and market access as leverage to push companies to bring capacity and capital expenditure to the U.S.

(2026 Is it still worth investing in TSMC stocks?)

This article, “U.S. Secretary of Commerce: TSMC Violates DEI Clauses, Needs Additional Investment for Renegotiation,” first appeared on Chain News ABMedia.