Taiwan has pushed back firmly against calls from Washington to move a large share of its semiconductor production to the United States, with the island’s top tariff negotiator saying it would be “impossible” to relocate 40% of Taiwan’s chipmaking capacity. The comments underscore growing tension between strategic cooperation and economic reality as the U.S. seeks to reduce its reliance on Asia-based semiconductor manufacturing.
Speaking in an interview broadcast late Sunday on Taiwanese television channel CTS, Vice Premier Cheng Li-chiun said she had made Taiwan’s position clear to U.S. officials. She stressed that the island’s semiconductor industry is built on a complex ecosystem developed over decades and cannot simply be transferred abroad without undermining its foundations.
Cheng said Taiwan’s semiconductor capacity would continue to expand at home, even as companies invest overseas, including in the United States. She emphasized that international expansion is based on the condition that Taiwan remains the core of the industry, with domestic investment continuing to grow across manufacturing, advanced packaging, and the wider supply chain.
Her remarks came in response to increasingly blunt statements from U.S. officials. U.S. Commerce Secretary Howard Lutnick said last week that concentrating semiconductor manufacturing close to China posed a strategic risk and argued that Washington needed to bring production back to American soil. He said the administration’s goal was for the United States to secure a 40% share of leading-edge semiconductor manufacturing by the time it leaves office.
While Taiwan and the United States reached an agreement last month to reduce tariffs on Taiwanese exports to 15% from 20%, and for Taiwan to increase its investment in the U.S., Cheng made clear that this would not involve relocating Taiwan’s science parks or dismantling its industrial clusters. Instead, she said Taiwan was willing to share its experience in building a successful semiconductor ecosystem and help the U.S. develop similar conditions domestically.
Cheng added that Taiwan’s total semiconductor capacity, including projects already operating, under construction, and planned, would far exceed its investments in the U.S. or any other country. She said the scale and depth of Taiwan’s domestic industry made it unrealistic to match or replace it elsewhere.
Lutnick has previously raised the stakes, warning in a CNBC interview last month that if 40% of Taiwan’s chip supply chain and production were not brought to the U.S., tariffs on Taiwanese goods could rise to 100%. He had earlier floated a 50-50 production split between Taiwan and the U.S., an idea Taipei rejected outright.
Despite the disagreement, Taiwanese firms are expanding their U.S. footprint. TSMC, the world’s largest contract chipmaker, is investing $165 billion in new facilities in Arizona, reflecting a compromise between Washington’s push for onshore production and Taipei’s insistence on keeping the heart of its semiconductor industry at home.
The exchange highlights the strategic balancing act facing Taiwan as it navigates pressure from its most important security partner while safeguarding the industrial base that underpins its economy and global technological influence.
