Taiwan Vice Premier Cheng Li-chiun has rejected a US demand to move 40% of the island’s chip production capacity to the United States and reiterated that the island’s most advanced semiconductor technology will remain on the island.
In an interview on CNBC, US Commerce Secretary Howard Lutnick said his goal was to bring 40% of Taiwan’s entire chip supply chain and production to the US. He said that if this does not happen, tariffs on Taiwan would likely rise to 100%.
“I told the US side very clearly — that’s impossible,” Cheng said in an interview with Taiwanese television channel CTS, according to the island’s national news agency Focus Taiwan (FT).
Also on AF: TSMC Says Second $17bn Plant in Japan Will Make 3nm Chips
Cheng, who is the island’s top tariff negotiator, said in the interview that Taiwan’s dominance in the production of advanced chips was the result of “an ecosystem developed over several decades”. It cannot be “moved” to the US, she said, according to FT.
Taiwan is home to the world’s largest contract chipmaker, TSMC, and produces about 90% of leading-edge (<3nm) chips. "I told the US side, we can't distribute production capacity, but we can expand our layout in the US," Cheng was quoted as saying. Cheng’s remarks come as Taiwan inches closer to a final agreement on a trade deal with the US. Once ratified it will cut US tariffs on the island’s exports to 15% from 20%. In return, Taiwanese companies are to invest $250 billion in the US, while the Taiwanese government will provide an equal amount in credit guarantees to facilitate their investments, according to Focus Taiwan.
The deal comes after months of negotiations and multiple demands from US officials to move significant chip capacity to the US.
In September, Lutnick told US television network NewsNation that Washington’s pitch to Taiwan would be a 50-50 split in making chips — a proposal that the island rejected that idea at the time.
Last week, Lutnick again said the government needed to bring semiconductors to the US
“You can’t have all semiconductor manufacturing 80 miles from China,” he said at an event. “That’s just illogical … So we need to bring it back.”
“When we leave office my goal, for this administration, is 40% market share in leading-edge semiconductor manufacturing.”
Advanced chip tech not leaving Taiwan
Cheng seemed to reject that suggestion too. In the interview, she stressed that the most advanced chipmaking will remain in Taiwan and not be transferred to other countries.
“It needs to be carried out in Taiwan, where there is a comprehensive ecosystem for continuous research and development,” Cheng said, adding that there would also be no relocation of Taiwan’s science parks.
But Taiwan was willing to share its experience in building an industry cluster and help the US develop a similar environment, Cheng said.
Cheng said the investments promised by the island in the deal were an example of the ‘Taiwan model’. The US will have to work with Taiwan, using the model, to build supply chains, she said.
Taiwanese chipmakers “will only rationally expand their investments to other countries after they have set up factories in Taiwan and confirmed they can mass produce,” Cheng said.
Domestic chipmaking still priority
The vice-premier also re-iterated that the expansion in other countries will not come at the cost of Taiwan’s chipmaking dominance.
She said the most advanced research and manufacturing processes will be performed “first in Taiwan.”
She also expressed confidence that Taiwan’s semiconductor capacity – including existing, under construction and planned projects across advanced manufacturing, advanced packaging and the broader supply chain – would far exceed its investment in the US or any other country.
Cheng’s statements would be in line with Taipei’s previous pledges to maintain the island’s leading role in chip supply chains. That pledge is particularly key to the Taiwanese people, who see the chip sector as a ‘shield’ against military threats from China, as Beijing views the democratically-governed island as its own territory.
“Our overall capacity (in Taiwan) will only continue to grow,” Cheng said on Sunday’s interview.
“Our international expansion, including increased investment in the United States, is based on the premise that we remain firmly rooted in Taiwan and continue to expand investment at home.”
- Vishakha Saxena, with Reuters
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