Taiwan has made it clear that it will not agree to Washington’s suggestion of producing 50% of the chips it currently exports to the U.S., stated the island’s chief trade negotiator.
During a press briefing, Cheng Li-chiun, who is also the nation’s vice premier, remarked on Wednesday that the proposal for a “50-50” division in semiconductor manufacturing was not even on the agenda, as she returned from discussions in the U.S., as reported by Taiwan’s Central News Agency.
Cheng mentioned that the discussions concentrated on reducing tariff rates, obtaining exemptions from tariff stacking — additional taxes — and lowering charges on Taiwanese exports. Currently, Taiwan is subjected to a “reciprocal” tariff rate of 20%.
Washington has engaged in talks with Taipei regarding the “50-50” division in semiconductor production, which would lessen American dependency on Taiwan, Commerce Secretary Howard Lutnick noted last weekend in an interview with NewsNation, adding that presently 95% of the U.S. demand is fulfilled through chips manufactured in Taiwan.
“My goal, and this administration’s goal, is to significantly onshore chip manufacturing — we must produce our own chips,” Lutnick stated. “The concept I proposed [to Taiwan] was, let’s achieve a 50-50 split. We handle half, and you handle half.”
U.S. President Donald Trump had previously criticized the island’s supremacy in chip production earlier this year, accusing it of “stealing” the U.S. chip market.
The Office of the U.S. Trade Representative and Taiwan’s Ministry of Economic Affairs did not promptly reply to CNBC’s inquiry for comments.
Lutnick’s proposition has been denounced by Taiwanese politicians, with Eric Chu, chairman of the main opposition party Kuomintang, labeling it “an act of exploitation and plunder,” according to the Central News Agency report.
“No one can betray Taiwan or TSMC, and no one can compromise Taiwan’s silicon shield,” Chu asserted, in reference to Taiwan Semiconductor Manufacturing Company, the world’s leading firm in advanced chip production.
Taiwan’s crucial role in global chip manufacturing is thought to have fortified the island’s defense against potential direct military actions from China, commonly referred to as the “Silicon Shield” theory.
In his NewsNation interview, Lutnick dismissed the “Silicon Shield,” contending that Taiwan would be more secure with a balanced chip production between Washington and Taipei. Beijing regards the democratically governed island of Taiwan as its territory and has pledged to reclaim it by force if required, while Taipei refutes those claims.
Taiwan People’s Party Chairman Huang Kuo-chang reportedly described Lutnick’s proposition as an effort to “undermine the fundamental structure of Taiwan’s technology sector.”
