Taiwan rejects US push to shift 40% of chip production

Taiwan’s top trade negotiator said it is “impossible” to relocate 40% of Taiwan’s semiconductor capacity to the US, countering recent US comments on shifting chip production.

In an interview with Taiwanese TV, Vice Premier Cheng Li-chiun emphasized Taiwan’s long-standing semiconductor ecosystem cannot be moved and will continue to grow domestically.

She added that Taiwan plans to expand its investment in the US but remains committed to its industry in Taiwan.

US Commerce Secretary Howard Lutnick previously said the US aims to capture 40% of the global market share in advanced semiconductor manufacturing, citing concerns over reliance on Taiwan and China.

Taiwan’s largest contract chipmaker, TSMC, is investing US$165 billion in new factories in Arizona, but the Taiwanese government maintains that its industry will not be relocated.

The US and Taiwan reached a tariff reduction deal last month, with Taiwan increasing investments in the US.

🔗 Source: Reuters

🧠 Food for thought

Implications, context, and why it matters.

The US is using tariff threats and perks to move more chip production home

The trade deal aims to avoid steep tariffs, while US Commerce Secretary Howard Lutnick warned of 100% duties if chipmakers fall short on US investment 1.
As a sweetener, Taiwanese firms that build new US semiconductor capacity can import up to 2.5 times that planned output without paying Section 232 duties (a US tariff tool tied to national security) during the approved construction window 2.
Lutnick set a fast goal of moving 40% of Taiwan’s supply chain and production to the US during President Trump’s term 2. Taiwan’s vice premier Cheng Li-chiun called that schedule “impossible” given how tightly connected the semiconductor ecosystem is.

The standoff adds strain to supply chains and Taiwan’s silicon shield idea

This onshoring push puts pressure on Taiwan’s “silicon shield,” the view that Taiwan’s chipmaking edge helps deter aggression because other economies depend on its chips 3.
Opposition figures in Taiwan warn the deal could “hollow out” the domestic industry if money and facilities keep moving offshore 1.
Major US buyers of TSMC-made chips, including AMD, Apple, Nvidia, and Qualcomm, face added uncertainty because Lutnick tied a possible 100% tariff to investment levels 1.
The package also includes tariff carve-outs, with planned 0% exceptions for some categories including generic pharmaceuticals, their ingredients, and aircraft components, while most reciprocal tariffs on Taiwanese goods are expected to top out at 15% 1.