Taiwan Declares US Goal of 40% Chip Production Shift 'Impossible'
In a definitive statement, Taiwan has pushed back against recent calls from American officials to relocate a significant portion of its semiconductor manufacturing capacity to the United States. The island's top tariff negotiator, Vice Premier Cheng Li-chiun, emphasized that moving 40% of Taiwan's chip production to the US is an unfeasible objective.
Decades of Ecosystem Development Cannot Be Relocated
During an interview broadcast on Taiwanese television channel CTS, Cheng Li-chiun made it clear to Washington that Taiwan's semiconductor ecosystem, which has been meticulously built over decades, cannot be uprooted and transferred. "I have made it very clear to the United States that this is impossible," she stated, referring to the 40% target floated by US Commerce Secretary Howard Lutnick.
Cheng underscored that this vital industry will continue to expand and thrive within Taiwan itself. "Our overall capacity will only continue to grow," she affirmed. However, she noted that Taiwan is open to increasing its presence in the United States through additional investments, provided that its core operations remain firmly rooted at home.
US Officials Advocate for Domestic Semiconductor Manufacturing
The comments from Taiwan come in response to persistent advocacy from US officials like Commerce Secretary Howard Lutnick, who has argued for bringing more semiconductor production to American soil. Lutnick has expressed concerns over the current concentration of chip manufacturing near China, 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 an ambitious goal for his administration: achieving 40% market share in leading-edge semiconductor manufacturing within the US. He has even suggested that failure to meet this target could result in tariffs on Taiwanese exports skyrocketing to 100%, a significant increase from the current rates.
Recent Tariff Agreement and Investment Plans
Last month, Taiwan and the United States reached a pivotal agreement to reduce tariffs on Taiwanese exports from 20% to 15%. This deal also includes commitments from Taiwan to boost its investments in the US. Despite this cooperation, Cheng Li-chiun clarified that there are no plans to relocate Taiwan's established science parks.
Instead, Taiwan is willing to share its expertise in developing industry clusters and assist the US in cultivating a similar environment for semiconductor growth. Cheng expressed confidence that Taiwan's semiconductor capacity—encompassing existing facilities, projects under construction, and planned ventures across advanced manufacturing, packaging, and the broader supply chain—will far surpass its investments in the US or any other nation.
Historical Context and Taiwan's Stance
This is not the first time Taiwan has rejected US proposals regarding chip production sharing. In September, when Lutnick suggested a 50-50 split in manufacturing chips—most of which are currently produced in Taiwan—the idea was promptly dismissed by Taiwanese authorities.
Meanwhile, Taiwan Semiconductor Manufacturing Company (TSMC), the world's largest contract chipmaker, is proceeding with a massive $165 billion investment to construct factories in Arizona, USA. This move highlights Taiwan's strategy of expanding internationally while maintaining and strengthening its domestic industry base.
Cheng Li-chiun reiterated Taiwan's position clearly: "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 reinforces Taiwan's dual approach of fostering global partnerships without compromising its local semiconductor supremacy.
