Taiwan Tells US: Moving Forty Percent of Chip Production is Impossible

Taiwan Draws a Line in the Sand on Chip Production

Taiwan's top trade negotiator has delivered a blunt message to Washington: relocating forty percent of the island's semiconductor manufacturing capacity to the United States simply cannot be done.

Vice Premier Cheng Li-chiun, who led Taiwan's recent trade negotiations with the US, made the declaration during a television interview broadcast on Sunday, stating she had clearly conveyed to American officials that Taiwan's semiconductor ecosystem, built over decades, cannot simply be uprooted.

The Forty Percent Target

The rejection is aimed squarely at US Commerce Secretary Howard Lutnick, who has repeatedly pushed for a massive shift in chip production from Taiwan to American soil. Lutnick has argued that having the vast majority of advanced semiconductor manufacturing located just eighty miles from China is strategically unacceptable, and has warned that tariffs on Taiwanese goods could rise to one hundred percent if his goals are not met.

The commerce secretary had previously pitched an even more ambitious fifty-fifty split in chip production during talks with Taipei in September twenty twenty-five, which Taiwan also rejected.

A Quarter-Trillion Dollar Commitment Already in Place

The standoff is particularly notable given that Taiwan and the US signed a major trade agreement on January fifteenth that committed Taiwanese firms to invest at least two hundred and fifty billion dollars in US manufacturing, along with two hundred and fifty billion in credit guarantees. In exchange, tariffs on Taiwanese goods were reduced from twenty to fifteen percent.

TSMC, the world's largest contract chipmaker, has already committed one hundred and sixty-five billion dollars to build a massive facility cluster in Arizona, including six fabrication plants, two advanced packaging facilities, and a research centre. However, the company maintains it will keep its most advanced technologies in Taiwan.

The Silicon Shield Question

The dispute touches on Taiwan's so-called silicon shield, the theory that the island's dominance in semiconductor production deters Chinese aggression by making any military action economically catastrophic for the global economy. Critics argue that shifting production away from Taiwan could weaken this deterrent effect, while supporters of reshoring say relying on a single point of failure is too risky for global supply chains.