Taiwanese Companies US Expansion Guide: Key 10 Questions Answered
US tariff policies are driving Taiwanese manufacturers to diversify supply chains. This article analyzes Texas vs Delaware legal and tax differences for Taiwanese companies setting up US operations.
With the US imposing 20% reciprocal tariffs and 100% semiconductor tariffs, Taiwanese companies are accelerating their US manufacturing investments. The United States is vast, and each state varies greatly in its attitude toward attracting investment, industrial subsidies, and tax incentives. For businesses, “investing in the US” is only the first step — the more critical question is which state to register in, settle in, and operate from.
KPMG notes that the two states most familiar to Taiwanese business owners are Delaware, known for its corporate legal system and case law, and Texas, which has actively pursued legal reforms and has strong economic power. Each has its own characteristics. If companies fail to carefully evaluate the legal, tax, and industrial support structures in advance and choose the wrong location, even relocating to the US at great cost could result in an unsuitable development environment, reducing investment returns or even causing losses.
Key 10 Questions for Taiwanese Companies Setting Up in the US
1. Why are US tariff policies driving Taiwanese companies to set up factories?
The US 20% reciprocal tariff and 100% semiconductor tariff policies directly affect the cost structure of Taiwanese manufacturing. To diversify supply chain risks and maintain international competitiveness and stable customer orders, Taiwanese companies must accelerate their layout of new locations within the US and neighboring markets.
2. What are the differences in legal systems between Texas and Delaware?
Delaware is known as the “Corporate Capital of the World” due to its Court of Chancery specialized in corporate law disputes, rich commercial case law accumulated over time, and a trial system that does not use juries. This has attracted up to 66% of Fortune 500 companies to incorporate in Delaware. However, while Delaware’s case law foundation is solid, the broad interpretive space may still bring uncertainty in legal application.
In contrast, Texas has actively improved its corporate legal environment in recent years. The “Business Court” was established in 2023 and officially began operations in September 2024, with judges having commercial law expertise presiding and the jury system excluded, significantly improving trial professionalism and efficiency. The “SB 29 Bill” passed in May 2025 raises the threshold for shareholders to sue company management and provides liability protection for directors acting in good faith and in compliance with laws and company articles.
3. How do the tax systems differ between the two states?
Delaware exempts companies not operating within the state from corporate income tax and gross revenue tax, but imposes franchise tax based on capital size, ranging from $175 to $250,000 annually. This system has long attracted multinational companies to establish holding companies in Delaware.
Texas does not impose state corporate income tax at all, instead taxing net income (margin) after deducting specific items.
4. How much impact does Texas tax exemption have on investment costs?
Recently, the Taiwanese government has been negotiating tax exemption benefits with Texas, seeking complete state tax exemption for Taiwanese companies investing in Texas. This has received positive responses from the governor and passed the state house of representatives, currently pending approval from the state senate. If the tax exemption benefit is formally enacted, it will further lower the barrier for Taiwanese companies to invest.
5. What are the advantages and limitations of Delaware corporate law?
The advantage of Delaware corporate law lies in its mature case law system and specialized Court of Chancery. However, in 2018, a well-known American electric vehicle manufacturer passed a $56 billion CEO stock option compensation package, which was ruled invalid by the Delaware Court of Chancery due to procedural flaws and insufficient decision independence. Even after the shareholders’ meeting subsequently re-approved the proposal, the court rejected it, showing that incorporating in Delaware cannot completely avoid judicial risks.
6. What is the difference between US Business Courts and Courts of Chancery?
Delaware’s Court of Chancery specializes in corporate law disputes and has accumulated rich commercial case law, but may bring uncertainty in legal application due to broad interpretive space. Texas Business Court has judges with commercial law expertise presiding and excludes the jury system, offering higher professionalism and efficiency.
7. Why has Texas’s industrial cluster formed?
Texas’s attractiveness comes from the dual drive of policy and industry. On one hand, the US “CHIPS Act” and “Inflation Reduction Act” provide local subsidies and R&D resources; on the other hand, Texas has complete electrical infrastructure, high-end technical talent reserves, and abundant immigrant labor resources, allowing it to achieve a good balance between cost and efficiency.
8. What are the advantages of Taiwanese companies’ dual-track layout in Texas and Mexico?
Minister Liu Jingqing of the National Development Council analyzed that after US tariff policies took effect, Taiwanese large manufacturing companies are expected to accelerate their US layout, particularly focusing on Texas and Mexico. Texas can directly serve the US domestic market, while Mexico benefits from the USMCA (United States-Mexico-Canada Agreement), able to enter the North American market while maintaining tariff preferences.
Minister Guo Zhihui of the Ministry of Economic Affairs stated that to respond to tariff impacts, the Ministry plans to establish a trade and investment center in Texas and discuss establishing a technology industrial park with the US side, adopting a “large companies leading smaller ones” model to help SMEs and large companies jointly enter the US market, reducing the risks and costs of independent investment.
9. What impacts have occurred on the local economy and employment market?
Texas’s manufacturing expansion has significantly stimulated local economic activity. For example, in Sherman, during peak construction of GlobalWafers and Texas Instruments’ new factories, over 1,000 workers were on-site daily. Surrounding Starbucks, steakhouses, burger shops, and supermarkets have opened one after another. Local residents pointed out that almost none of these new restaurants existed a year ago; now, a new commercial strip has formed along the main road, showing the chained economic effects of semiconductor investment on the region.
10. What are the trends and risks of future expansion of Taiwanese companies in Texas?
As US high tariff policies and geopolitical uncertainty continue, Texas is expected to attract more Taiwanese manufacturing in the coming years. If the state tax exemption benefit is formally enacted, it will further lower the barrier for Taiwanese companies to invest and accelerate the formation of industrial clusters. At the same time, the mass production from GlobalWafers, Texas Instruments, and multiple server manufacturing companies will strengthen Texas’s position in the global supply chain and have a long-term positive impact on Taiwan-US trade relations.
Semiconductor and AI Server Industry Clusters Forming Rapidly
In the past five years, multiple key Taiwanese companies have chosen Texas as their core US investment location, covering semiconductors, AI servers, electronic components, and other fields:
| Industry | Companies | Investment Details |
|---|---|---|
| Semiconductor Materials | GlobalWafers (6488) | Building the first US mass production 12-inch silicon wafer fab in Sherman, Texas, receiving $400M from US CHIPS Act |
| AI Server Manufacturing | Foxconn, Quanta, Inventec, Wistron, Wiwynn, Compal | Layout in Texas or US-Mexico border to supply US cloud computing and AI application markets |
| Traditional Industry & Energy | Formosa Plastics, Nan Ya, CPC, Evergreen, Yang Ming, Teco | Covering petrochemical, energy, transportation, and heavy industry |
Keys to Success in Texas: Four Conditions
Council for Economic Planning and Development Vice Chairman Wang Jiansan pointed out that companies capable of setting up factories in the US mostly meet four conditions:
- High profit margin — to cope with US high production costs
- High automation — to alleviate labor shortages
- Industrial cluster effect — to leverage supply chain integration advantages
- Strong international customer requirements — to meet customer localization needs
Semiconductors, high-end servers, and high-end machine tools industries best meet these conditions, making them the main force in the layout.
Geography Lesson: Texas vs Delaware
| Texas | Delaware | |
|---|---|---|
| Abbreviation | Texas | Delaware |
| Location | Southern US | Northeastern US East Coast |
| Area | 2nd largest in US | 2nd smallest state in US |
| Capital | Austin | Dover |
| Known For | Cowboys, oil, tech industry | Corporate registration hub |
Note: Although both have “德” in Chinese, these are two completely different states. Only Texas is “德州”, while Delaware is “德拉瓦州”.
From an energy and livestock state to a core hot zone for US manufacturing reshoring, Texas’s role is rapidly transforming, and the deep participation of Taiwanese companies is one of the important forces driving this transformation.