Taiwan Firmly Rejects US Proposal to Relocate Semiconductor Manufacturing Capacity
In a definitive statement, Taiwan's Vice Premier Cheng Li-chiun has declared it would be "impossible" to relocate 40% of the island's semiconductor manufacturing capacity to the United States. This strong pushback comes as a direct response to recent comments from US officials advocating for a significant shift in global semiconductor production away from Taiwan.
Decades of Ecosystem Development Cannot Be Moved
During an interview with Taiwanese television channel CTS, Vice Premier Li-chiun emphasized that she has made Taiwan's position unequivocally clear to Washington. According to Reuters, she stated, "I have made it very clear to the United States that this is impossible," specifically referring to the 40% relocation target floated by US officials.
The Taiwanese semiconductor ecosystem represents decades of concentrated development and investment that cannot simply be transplanted to another country. This complex network includes not just manufacturing facilities but also specialized suppliers, research institutions, and a highly skilled workforce that has been cultivated over generations.
Domestic Growth Remains Priority Despite International Expansion
Li-chiun clarified that while Taiwan's semiconductor industry will continue to expand its international presence, including increased investment in the United States, this expansion is predicated on maintaining strong domestic roots. "Our overall capacity in Taiwan will only continue to grow," she affirmed. "But we can expand our presence in the United States. Our international expansion, including increased investment in the United States, is based on the premise that we remain firmly rooted in Taiwan and continue to expand investment at home."
This statement underscores Taiwan's dual-track approach: strengthening its domestic semiconductor industry while simultaneously pursuing strategic international partnerships and investments.
US Commerce Secretary's Ambitious Goals for Semiconductor Manufacturing
The Taiwanese rejection comes after US Commerce Secretary Howard Lutnick articulated ambitious goals for reshoring semiconductor manufacturing. Last week, Lutnick emphasized the strategic importance of bringing semiconductor production back to American soil, stating, "You can't have all semiconductor manufacturing 80 miles from China. That's just illogical ... So we need to bring it back."
Lutnick has set a clear target for the current administration: "When we leave office, my goal for this administration is 40% market share in leading-edge semiconductor manufacturing." This goal appears to directly conflict with Taiwan's position that its semiconductor ecosystem cannot be relocated.
Recent Trade Agreement and Taiwan's Alternative Offer
Last month, Taiwan and the United States reached a significant trade agreement that lowered tariffs on Taiwanese exports from 20% to 15% while increasing Taiwan's investment in the US. Despite this cooperative development, Li-chiun made it clear that there would be no relocation of Taiwan's science parks, which serve as critical hubs for semiconductor innovation and production.
However, Taiwan has expressed willingness to share its expertise in building industry clusters and help the United States develop a similar environment for semiconductor manufacturing. This represents a compromise approach where Taiwan offers knowledge transfer rather than physical relocation of its manufacturing capacity.
Confidence in Domestic Semiconductor Leadership
Vice Premier Li-chiun expressed confidence that Taiwan's semiconductor capacity—including existing facilities, projects under construction, and planned developments across advanced manufacturing, advanced packaging, and the broader supply chain—would far exceed its investment in the United States or any other country.
This confidence is bolstered by major investments like TSMC's $165 billion commitment to build factories in Arizona, demonstrating that Taiwan's semiconductor industry can expand internationally while maintaining its domestic manufacturing supremacy.
Background on US Pressure and Taiwan's Consistent Position
In an interview on CNBC last month, US Commerce Secretary Howard Lutnick revealed that his goal was to bring 40% of Taiwan's entire chip supply chain and production to the United States. He suggested that if this relocation did not occur, tariffs on Taiwanese semiconductors could potentially rise to 100%.
This follows earlier proposals from Washington, including a September pitch for a 50-50 split in chip production between Taiwan and the United States. Taiwan rejected that proposal at the time, maintaining a consistent position that its semiconductor manufacturing ecosystem represents a strategic national asset that cannot be divided or relocated.
The current standoff highlights the tension between American desires for semiconductor supply chain security and Taiwan's determination to protect its position as the world's leading semiconductor manufacturer, a status built through decades of focused investment and technological development.
