Taiwan’s potential deal with Donald Trump to lower its trade tariffs could involve its chipmakers training US workers in chipmaking and other advanced industries, Reuters reported, citing people familiar with the matter.
Under the arrangement, Taiwanese companies such as TSMC, the world’s largest contract chipmaker, would send new capital and workers to expand their US operations and train US workers.
News of the arrangement is the latest in ongoing speculation about Taiwan’s potential tariff deal, with the Financial Times reporting last week that the island state could end up investing a cumulative $400 billion in the US for a lower rate.
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Taiwan’s exports to the United States are currently subject to a 20% tariff. Taipei has been in talks to reduce that figure as part of an overarching deal with Washington.
Semiconductors, vital for all kinds of high-tech products, are currently exempt from tariffs while the US builds domestic capacity.
According to Reuters, its sources said Taiwan’s total investment in the US would be smaller than that of its main regional economic rivals. South Korea and Japan have pledged a total of $350 billion and $550 billion in investment in the US, respectively, under deals to trim US tariffs on most of their goods to 15% from 25%.
Taiwan will, however, include support to help Washington build science park infrastructure, drawing on Taiwanese know-how, Reuters reported.
Speaking to reporters in Taipei on Wednesday, Taiwan Premier Cho Jung-tai said the two sides are at the stage of exchanging documents to firm up certain details.
Last month, Taiwan Vice Premier Cheng Li-chiun, who is leading talks aimed at reducing Trump’s tariffs on Taiwanese exports, said she was hopeful that both sides could reach a consensus on expanding investment in the United States.
Still, it remains unclear when the Taiwan deal will be sorted and what specifics will make it into the final agreement, Reuters cited its sources as saying. They cautioned that any deal terms could change until they were finalised in negotiations.
Meanwhile, White House spokesman Kush Desai said that until an announcement comes from Trump, “reporting about potential trade deals is speculation.”
Replicating the ‘Taiwan model’
If commitments on training American workers are finalised, Taiwan would look to replicate in the US its own successes in semiconductor manufacturing, officials told Reuters.
Taiwan’s Office of Trade Negotiations said in a statement that its team was continuing to discuss supply chain cooperation with the United States under a “Taiwan model.”
Taiwan began developing its science parks, where the bulk of its semiconductor manufacturing takes place, in the 1980s, building up a whole supply chain for seamless production.
Replicating that success in the US would also benefit Taiwanese chipmakers such as TSMC, which is investing $165 billion to build chip factories in Arizona.
TSMC, which declined to comment on the trade talks, has struggled to find the right workers for its US projects.
Its CEO and chairman CC Wei said in January that building the new factory in Arizona has taken at least twice as long as in Taiwan, because of a shortage of skilled workers and gaps in the supply chain. TSMC, for example, brought half of the construction workers from Texas to Arizona, increasing costs due to relocation and accommodation, he said.
“It is very difficult for other countries to do this kind of work, because only we have this concept, practice, and track record of service parks, which allows us to undertake this kind of initiative in the United States,” Taiwan Vice Premier Cheng Li-chiun explained last month.
Taiwan’s representative to the APEC summit, Lin Hsin-i, said this month that he and US Treasury Secretary Scott Bessent had discussed supply chains and semiconductors during a meeting on the sidelines of the event in South Korea.
Lin said Bessent had been keen to hear about Taiwan’s experience in building up its semiconductor clusters.
That said, although Taipei has been keen to show its commitment to Trump’s call to boost US manufacturing, it has also said the most advanced semiconductor technologies and research will remain in Taiwan.
TSMC, for instance, is legally bound to keep the bulk of its production in Taiwan, while also limiting the production of its most advanced chips on the island.
Key to those restrictions are Taiwan’s strategic significance to the world as the maker of the chips that power everything from electronic toys to artificial intelligence. That importance has led Taiwanese people to view chipmakers like TSMC as a ‘sacred mountain’ that protects the island from aggressors such as China.
China, however, views the democratically-governed island as its own territory.
China worries loom
Taiwan’s ongoing negotiations with the US also come at a time when China is adopting an increasingly aggressive stance against the island.
Chinese President Xi Jinping spoke with Trump in a call on Monday as the two economic rivals work to hash out steadily worsening ties. As part of that call, Xi told Trump that Taiwan’s “return to China” was an important issue for the country. The White House has not commented on that element of the call.
On Wednesday, Beijing further warned it would “crush” any foreign attempts to interfere over Taiwan, after Japan announced plans to deploy missiles on an island near Taipei.
Those tensions mean any agreement between the US and Taiwan could also rile Beijing. It would also complicate trade talks between Washington and Beijing after tensions — intensified by China’s blockade on rare earth exports — have only just eased.
Nevertheless, the US, so far, seems unfazed by those concerns. Washington is Taiwan’s most important international backer and the ultimate guarantor of its security, despite the lack of formal diplomatic ties.
On Wednesday, the de facto US ambassador in Taipei said he welcomed a move by Taiwan President Lai Ching-te to introduce a $40-billion defence budget in the face of the rising threat from China.
“The United States supports Taiwan’s rapid acquisition of critical asymmetric capabilities needed to strengthen deterrence,” American Institute in Taiwan director Raymond Greene said in a Facebook post.
“The entire world has a stake in ensuring that differences across the Taiwan Strait are resolved peacefully and free from coercion.”
- Reuters, with additional editing and inputs from Vishakha Saxena
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