The U.S. and Taiwan reached a trade agreement aimed at expanding semiconductor manufacturing in the United States, the Commerce Department announced.

Taiwanese chip and technology firms will invest at least $250 billion in U.S. production, backed by $250 billion in credit guarantees from Taiwan’s government.

In return, the U.S. will reduce reciprocal tariffs on Taiwan to 15% and eliminate them on certain goods, while offering tariff exemptions for companies building U.S. chip plants.

Taiwan Semiconductor Manufacturing Co. may expand its Arizona operations under the deal, which provides flexibility on imports during factory construction, CNBC has reported.

The agreement seeks to strengthen U.S. semiconductor supply chains, reduce reliance on Taiwan, and counter geopolitical risks tied to China.