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

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Taiwan stated on October 1 that it will not agree to a U.S. proposal to shift half of its semiconductor production to the United States, despite mounting pressure from Washington over tariffs and chip supply security, according to Reuters.

Taiwan Vice Premier Cheng Li-chiun, who is leading tariff negotiations with Washington, dismissed comments from U.S. Commerce Secretary Howard Lutnick that the two sides had discussed a 50-50 arrangement.

Cheng told reporters in Taipei, “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.”

In an interview with NewsNation, Lutnick said having 50% of Taiwan’s chip production in the United States would ensure “we have the capacity to do what we need to do if we need to do it.” He added, “That has been the conversation we've had with Taiwan, that you have to understand that it’s vital for you to have us produce 50%.” He also said Washington’s goal was to reach “40% market share, and maybe 50% market share, of producing the chips and the wafers, you know, the semiconductors we need for American consumption, that's our objective,” AFP reported.

Taiwan, home to the world’s biggest contract chip maker TSMC, produces more than half of the world’s semiconductors and nearly all the most advanced ones. AFP noted that the concentration of production on the island has long been viewed as a “silicon shield” against Chinese aggression.

Taipei is also seeking tariff relief. Taiwan’s exports to the United States are subject to a 20% levy first imposed under former U.S. President Donald Trump. According to Reuters, Cheng said that Washington discussions had made “certain progress,” and that the discussions were “detailed.”

Trump has threatened to impose a “fairly substantial tariff” on semiconductors. Taiwan has pledged to invest more in the U.S., buy more American energy, and increase its defense spending above 3% of GDP.

TSMC is investing $165 billion to build plants in Arizona, though most of its production will remain in Taiwan. The company declined to comment on the proposed 50-50 deal.