I know but what if TSMC had to apply possible US sanctions against China? First, TSMC would be a US company, which could give the USA an excuse to tell TSMC to apply sanctions against China. Also, the USA could take the US factory.

The US already has that ability to coerce foreign companies. TSMC buys chip making supplies and equipment from US companies, and there's been discussions around requiring foreign companies using US technology to obtain a license to not supply chips to Huawei or risk getting cut off from the US tech network themselves.

Are you under the impression that Taiwan wouldn’t welcome US sanctions on China with dancing in the streets? Taiwan was bitterly opposed to detente.

TSMC already has some US operations, so this wouldn't change the ability of the Trump Administration to put that kind of squeeze on them.