Taiwan Says Shifting 40% of Chip Capacity to United States Is ‘Impossible’

Taiwan has firmly rejected US demands to relocate 40% of its semiconductor production capacity, calling the proposal impossible due to the deeply integrated ecosystem built over decades. Vice Premier Cheng Li-chiun clarified that while Taiwan will expand investments in the US, its most advanced chip technologies and manufacturing processes will remain in Taiwan.

Taiwan Rejects US Proposal to Relocate Semiconductor Production

Taiwan’s trade negotiators have told the United States that relocating 40% of the island’s semiconductor production capacity is not feasible. Vice Premier Cheng Li-chiun said she made Taiwan’s stance clear during negotiations, stressing that such a large-scale shift is impossible.

Her remarks were in response to earlier comments by US Commerce Secretary Howard Lutnick, who said Washington aims to move 40% of Taiwan’s chip supply chain to the United States.

Decades-Built Semiconductor Ecosystem Cannot Be Relocated

Cheng explained that Taiwan controls nearly 90% of global advanced semiconductor production, a position achieved through decades of ecosystem development. This includes manufacturing infrastructure, research institutions, supplier networks, and skilled talent pools that cannot simply be transferred overseas.

She emphasized that Taiwan’s semiconductor dominance is the result of long-term industrial planning and cannot be replicated quickly in another country.

Advanced Chip Technology and R&D to Stay in Taiwan

Taiwan has also made it clear that its most advanced semiconductor technologies and research capabilities will remain at home. Cheng stated that high-end research, innovation, and mass production must take place in Taiwan, where the complete ecosystem exists to support continuous development.

She added that Taiwanese semiconductor firms will only expand overseas investments after establishing full-scale production and operational stability in Taiwan.

Investment Expansion in US Without Production Transfer

While rejecting the relocation proposal, Taiwan confirmed plans to expand its semiconductor footprint in the United States. Under the agreement framework:

• Taiwanese semiconductor and technology firms will invest $250 billion in the US based on independent business strategies.
  
• The Taiwanese government will provide $250 billion in credit guarantees to support these investments.
  

This approach, referred to as the “Taiwan model,” combines corporate-led investment with government-backed financial support and differs from investment frameworks adopted by Japan and South Korea.

Tariff Reduction Strengthens Taiwan’s Trade Position

As part of the broader agreement, Washington will lower tariffs on Taiwanese goods from 20% to 15%, placing Taiwan on equal footing with major competitors such as Japan, South Korea, and the European Union.

Cheng said this tariff adjustment improvesTaiwan’s global trade competitiveness while maintaining its strategic control over critical technologies.

Supply Chain Cooperation Without Core Technology Transfer

Taiwan and the United States will collaborate on building resilient supply chains, but Taiwan’s science parks, advanced manufacturing hubs, and core chip technologies will not be relocated.

Cheng reiterated that Taiwan’s most advanced manufacturing processes and research activities must be carried out domestically to preserve long-term technological leadership.

Legislative Approval Still Pending

Officials from both countries are expected to finalize and release the full agreement details in the coming days or weeks. The deal will then be submitted to Taiwan’s opposition-controlled legislature for approval, making parliamentary consent a crucial next step.

Conclusion

Taiwan has drawn a firm strategic boundary by rejecting the relocation of 40% of its semiconductor production to the United States. While supporting overseas investment expansion, Taipei remains committed to preserving its technological dominance by keeping advanced chip manufacturing and research firmly anchored at home.

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