TAIPEI: Taiwan should pay the United States (US) for its defence as it does not give the country anything, US Republican presidential candidate Donald Trump said, sending shares of Taiwanese chip manufacturer TSMC down on Wednesday.

"I know the people very well, respect them greatly. They did take about 100 per cent of our chip business. I think, Taiwan should pay us for defence," Trump said in an interview with Bloomberg Businessweek on June 25 but published on Tuesday.

"You know, we're no different than an insurance company. Taiwan doesn't give us anything."

TSMC is the dominant maker of advanced chips used in everything from artificial intelligence (AI) applications to smartphones and fighter jets, and analyst believe any conflict over Taiwan would decimate the world economy.

The US is Taiwan's most important international supporter and arms supplier, but there is no formal defence agreement.

The US is, however, bound by law to provide Taiwan with the means to defend itself.

Taiwan, which China views as its own territory, has complained of repeated Chinese military activity over the past four years as Beijing seeks to pressure the democratically governed island which rejects China's sovereignty claims.

US President Joe Biden has upset the Chinese government with comments that appeared to suggest the US would defend Taiwan if it were attacked, a deviation from a long-held US position of "strategic ambiguity".

Washington and Taipei have had no official diplomatic or military relationship since 1979, when the US switched recognition to Beijing.

There was no immediate reaction from Taiwan's government, nor TSMC which is currently in its quiet period ahead of its second quarter earnings report on Thursday.

TSMC shares down

Shares in Taiwan Semiconductor Manufacturing Co Ltd (TSMC) , the world's largest contract chipmaker and a major Apple and Nvidia supplier, fell more than two per cent on Wednesday morning. The broader market was down around 0.4 per cent.

TSMC is spending billions building new factories overseas, including US$65 billion on three plants in the US state of Arizona, though it says most manufacturing will remain in Taiwan.

Taiwan also has a backlog worth some US$19 billion of arms deliveries from the United States, which US officials and politicians have repeatedly pledged to speed up.

Since 2022, Taiwan has complained of delays in deliveries of US weapons, such as Stinger anti-aircraft missiles, as manufacturers focused on supplying Ukraine to help it battle invading Russian forces.

In April, the US Congress had passed a sweeping foreign aid package which includes arms support for the island, after House Republican leaders abruptly switched course and allowed a vote on the US$95 billion in mostly military aid for Ukraine, Israel and Taiwan and US partners in the Indo-Pacific.

China held two days of war games around the island shortly after President Lai Ching-te took office in May, saying it was "punishment" for his inauguration speech, which Beijing denounced as being full of separatist content.

But China has also been using grey zone warfare against Taiwan, wielding irregular tactics to exhaust a foe by keeping them continually on alert without resorting to open combat. This includes sending balloons over the island and almost daily air force missions into the skies near Taiwan.

China has never renounced the use of force to bring Taiwan under its control. Lai, who says only the Taiwanese people can decide their future, has repeatedly offered talks but has been rebuffed.

 - Reuters