Taiwan Rejects U.S. Proposal for 50-50 Semiconductor Production Deal

Taiwan has firmly rejected a proposal from the United States that would require the island to shift half of its semiconductor production to American soil. This demand was articulated by U.S. Secretary of Commerce Howard Lutnick, who suggested a 50-50 split in chip manufacturing during a recent interview. Taiwan's Vice Premier Cheng Li-chiun, who led tariff negotiations with the U.S., clarified that this proposal was never discussed and that Taiwan would not agree to such conditions. "Our negotiating team has never made any commitment to a 50-50 split on chips," Cheng stated, emphasizing the island's commitment to maintaining its semiconductor dominance.

CNNTaiwan Shoots Down US Push For 50-50 Chip Production DealTaiwan Rejects U.S. Proposal for 50-50 Semiconductor Production DealReutersCNBCUS Negotiating a Chips-For-Protection Deal With Taiwan: Lutnick

Taiwan is home to Taiwan Semiconductor Manufacturing Company (TSMC), the world's largest contract chipmaker, which produces over 90% of advanced semiconductors used globally, including for major clients like Nvidia and Apple. The U.S. has expressed growing concern over its reliance on Taiwan for semiconductor supply, particularly given Taiwan's proximity to China, which has threatened to annex the island. The U.S. aims to reduce this dependence by increasing domestic chip production, with Lutnick advocating for a significant shift in production capabilities.

Taiwan Rejects U.S. Proposal for 50-50 Semiconductor Production DealCNBCCNNTaiwan Shoots Down US Push For 50-50 Chip Production DealReutersUS Negotiating a Chips-For-Protection Deal With Taiwan: Lutnick

The U.S. proposal has faced backlash within Taiwan. Legislator Hsu Yu-chen of the opposition Kuomintang party criticized the demand as "outright plunder" and warned that it could undermine Taiwan's strategic security. Experts have echoed these sentiments, arguing that forced production shifts could weaken Taiwan's semiconductor ecosystem and its bargaining power in international relations. Arisa Liu from the Taiwan Institute of Economic Research noted that such demands could bring "more harm than benefit" to Taiwan.

CNNTaiwan Rejects U.S. Proposal for 50-50 Semiconductor Production DealCNBCReutersTaiwan Shoots Down US Push For 50-50 Chip Production Deal

Taiwan's government has indicated that while it seeks to cooperate with the U.S. on supply chain security, it will not compromise its semiconductor industry. Premier Cho Jung-tai mentioned that "the most critical substantive consultations are currently underway," suggesting ongoing negotiations aimed at reducing U.S. tariffs on Taiwanese goods. Meanwhile, U.S. officials have remained silent on the specifics of the proposal following Taiwan's rejection.

CNN

As negotiations continue, Taiwan may seek to secure tariff relief or agricultural trade concessions in exchange for limited expansions of chip facilities abroad. However, if U.S.-China tensions escalate, Washington might exert greater pressure on Taiwan to comply with its demands. The outcome of these discussions will significantly influence the balance of power in the global semiconductor industry and Taiwan's strategic position in U.S.-China relations.

Taiwan Rejects U.S. Proposal for 50-50 Semiconductor Production DealCNNReutersTaiwan Shoots Down US Push For 50-50 Chip Production DealCNBC

• “Our negotiating team has never made any commitment to a 50-50 split on chips. Rest assured, we did not discuss this issue during this round of talks, nor would we agree to such conditions,” — Cheng Li-chiun, Vice Premier of Taiwan

Reuters

• “If the US forces a division of TSMC’s most advanced production capacity, the effectiveness of the ‘Silicon Shield’ will be weakened, and Taiwan’s strategic security leverage will be completely lost,” — Hsu Yu-chen, Legislator, Kuomintang Party

CNN

• “Significant investments and capacity shifts toward the US will inevitably weaken Taiwan’s own ecosystem, undermining the integrity of its supply chain,” — Arisa Liu, Director, Taiwan Institute of Economic Research

CNN

This situation underscores the delicate balance Taiwan must maintain between its economic interests and its strategic security in the face of external pressures.

Taiwan Rejects U.S. Proposal for 50-50 Semiconductor Production Deal