Taiwan rejects US demand for half of chips to be made in America. - Bloomberg

Taiwan rejects US demand for half of chips to be made in America. - Bloomberg

Taiwan has firmly rejected a U.S. request to relocate half of its semiconductor production to American soil. This pushback comes amidst ongoing trade negotiations and Taiwan's efforts to ease tensions by increasing U.S. investments and defense spending. The rejection was announced by Vice Premier Cheng Li-chiun, who stated that the idea of a 50-50 split in chip production was never discussed or agreed upon by Taiwan .

The U.S. has long been concerned about its over-reliance on Taiwan Semiconductor Manufacturing Co. (TSMC) and its suppliers, which produce the vast majority of the world's most advanced chips. This reliance was particularly highlighted during the Covid-era shortages, which affected industries from car-making to military technology and AI .

The U.S. Commerce Secretary, Howard Lutnick, has suggested that the proposal to shift half of chip production to the U.S. is a way to reduce this reliance. However, Taiwan's cabinet has stated that more than 70% of Taiwan's exports to the U.S. are semiconductor-related and are subject to the Section 232 investigation .

The negotiations between Taiwan and the U.S. have been ongoing, with both sides making progress on tariffs, reciprocal tariffs, and supply chain cooperation. However, the issue of chip production remains a contentious point. Taiwan has pledged to boost U.S. investments, increase energy purchases, and raise its defense spending above 3% of GDP to ease tensions, while resisting pressure on chip production .

The U.S. imposed a 20% reciprocal tariff on Taiwanese exports in July, which sparked concern among manufacturers. Semiconductor-related goods were exempted from this tariff, as they remain under the Section 232 review .