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1 month ago
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Taiwan has rejected US demands to shift semiconductor manufacturing so that half of America's chip needs are produced domestically, as tariff negotiations with the Trump administration intensify.
The US has been pressing Taiwan to reduce American dependence on chips manufactured on the island — which accounts for over 60 percent of global semiconductor production and roughly 90 percent of the world's most advanced chips — as part of ongoing trade talks.
"Our goal is to get to 40 percent market share, and maybe 50 percent market share of producing the chips and the wafers, you know, the semiconductors we need for American consumption. That's our objective and I think it will shock everybody how successful we are," US Commerce Secretary Howard Lutnick said in an interview earlier this week with News Nation.
But Taiwan's Vice Premier Cheng Li-chiun, contradicted that vision upon returning from Washington negotiations. Taiwan has "never made any commitment to a 50-50 split on manufacturing chips, and would not agree to such terms," she said, according to The Taipei Times.
Washington already imposed a 20 percent tariff on all goods imported from Taiwan, which came into effect in August, and the Trump administration is probably banking on the Taipei government wanting to see that reduced.
The President continues to float the possibility of 100 percent tariffs on imported semiconductors, as part of his push to bring chip production to American soil.
The latest proposal would reportedly require tech companies to manufacture one chip domestically for every chip imported - or face the punitive 100 percent tariff.
- China accuses Taiwan of running five feeble APT gangs, with US help
- Intel and Microsoft staff allegedly lured to work for fake Chinese company in Taiwan
- Taiwan thumbs its nose at Beijing by blocking chip exports to SMIC and Huawei
- Nvidia sets up shop in Taiwan with AI supers and a factory full of ambition
Washington's urgency stems from Taiwan's geographic position, about 80 miles away from mainland China, and the fact that much of America's critical chip supply originates there.
"The Chinese have said they are going to take Taiwan, so this is an issue," Lutnick said in his interview, "So my objective and this administration's objective is to get chip manufacturing significantly on-shored."
Lutnick even suggested the US military support for Taiwan could become a bargaining chip.
"Donald Trump would say it's not healthy for you, it's not healthy for us, because we protect you, and for us to protect you, come on, you need to help us achieve reasonable self-sufficiency," Lutnick said.
Taiwan's flagship chip biz TSMC has already said it expects to invest up to $165 billion in the US over the next several years, building semiconductor fabrication plants at a site in Arizona.
However the US goal of onshoring is likely to be extremely costly. To get to 40 percent of the demand being made domestically would require investment of "north of $500 billion," Lutnick conceded. No wonder the Trump administration would like some help. ®
