Taipei's government has rejected proposals to shift a large portion of the island's semiconductor output to the United States, with Vice Premier Cheng Li-chiun saying it would be "impossible" to move 40% of Taiwan's semiconductor capacity to the U.S. In comments aired on Taiwanese television channel CTS late on Sunday, Cheng argued that Taiwan's chip ecosystem has been cultivated over decades and cannot be transplanted wholesale.
Cheng said she told U.S. officials directly that the 40% goal floated by some in Washington could not be achieved. "I have made it very clear to the United States that this is impossible," she said, referring to the 40% target.
At the same time, Cheng left open the prospect of expanded Taiwanese investment within the United States. She said Taiwan's semiconductor industry will continue to invest at home and that the island's overall capacity will only increase. "Our overall capacity (in Taiwan) will only continue to grow," she said. "But we can expand our presence in the United States."
Cheng framed any overseas expansion as complementary to, not a replacement for, Taiwan's domestic industry. "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," she said, adding that Taiwan would not relocate its science parks but is willing to share its experience in building an industry cluster to help the U.S. develop a similar environment.
The exchange follows recent public comments from U.S. officials pressing for a substantial reallocation of semiconductor manufacturing. U.S. Commerce Secretary Howard Lutnick said on Tuesday that the United States needs to bring semiconductor production to American soil, arguing it is illogical to have "all semiconductor manufacturing 80 miles from China." He added, "So we need to bring it back."
Lutnick has set a 40% market share goal for leading-edge semiconductor manufacturing during his administration. In a previous interview last month on CNBC, he said his objective was to bring 40% of Taiwan's entire chip supply chain and production to the United States, and warned that if this did not happen, tariffs on Taiwan could increase substantially, potentially to 100%.
Other comments by Lutnick have included a proposed split of manufacturing, with a 50-50 balance in chip production between the United States and Taiwan. Taiwan formally rejected that idea at the time, and Cheng's latest remarks reiterate that relocation at the scale proposed is not feasible for the island's established industry.
Taiwan and the United States reached an agreement last month to adjust tariffs on Taiwanese exports to the U.S., lowering them from 20% to 15%, with a corresponding commitment from Taiwan to raise investment in the United States. Cheng said Taiwan's semiconductor capacity - accounting for existing facilities, those under construction and planned projects across advanced manufacturing, advanced packaging and the broader supply chain - will substantially exceed any measures of Taiwanese investment in the United States or other countries.
The world's largest contract chipmaker, TSMC, is already pursuing investment in the United States. The company is investing $165 billion to build factories in the U.S. state of Arizona, a project noted in public discussion of Taiwan-U.S. cooperation.
While Taipei emphasises continued domestic expansion and knowledge-sharing, U.S. officials continue to advocate shifting more of the semiconductor supply chain onto U.S. soil. The two sides have agreed to lower tariffs on Taiwanese exports and increase Taiwanese investment in the United States, but significant differences remain over the scale and pace of any relocation of production.