Taiwan Semiconductor Manufacturer (TSMC) logo displayed on smartphone screen
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The Trump administration is urging Taipei to shift investment and chip production to the US so that half of Taiwan’s demand is produced locally.
Washington discussed with Taipei about the splitting of the “50-50” in semiconductor production. This led to US Secretary of Commerce, Howard Lutnick, told News Nation in an interview released over the weekend.
Taiwan is said to produce more than 90% of the world’s advanced semiconductors. This is the cause of concern, according to Lutonic, due to its distance from the US and its proximity to China.
“My purpose, and the purpose of this administration, is to significantly oversee the production of chips. We need to create our own chips,” says Lutnick. “The idea that I pitched (Taiwan) let’s get to 50-50. We’re producing half and you’re producing half.”
Lutnick said his goal is to reach around 40% of domestic semiconductor production by the end of President Donald Trump’s current term, with local investments going north of $500 billion.
Thanks to Taiwan’s base for chip production Taiwan Semiconductor Manufacturing Co.the world’s largest and most advanced contract chip manufacturer handles American high-tech heavyweight production such as Nvidia and Apple.
Taiwan’s important position in the production of global chips is believed to have ensured the island’s defense against direct military action from China, often referred to as the “silicon shield” theory.
However, in an interview with his News Nation, Lutonic downplayed the “silicon shield” and argued that Taiwan would be safer with a more balanced chip production between the US and Taiwan.
“My argument over them is, if you have 95% (production of chips), how do you get it to protect you? Are you going to put it on the plane? Are you going to put it on the boat?” Rutnick said.
Under the 50-50 plan, the US is still “fundamentally dependent” on Taiwan, but will have the ability to “do what we do if we need to do it, if we need to do it.”
Beijing saw the democratically governed Taiwan Island as its own territory and vowed to reclaim it by force if necessary. The current ruling party in Taipei rejected it and opposed such claims.
This year, the Chinese military held many large exercises off the coast of Taiwan to test its military capabilities. During one of China’s military training in April, Washington reaffirmed its commitment to support Taiwan.
Lutnick’s statement on the News Nation interview coincides with previous comments from Trump, suggesting that the US should get more rewards for its island state defense of China.
Last year, then-presidential candidate Trump said in an interview that Taiwan should pay the US for defense, accusing them of “stealing” the US chip business.
The US was once a leader in the global semiconductor market, but has lost market share due to the changes in the industry and the emergence of Asian juggernauts like TSMC. Samsung.
But Washington has worked to reverse that trend across multiple administrations.
TSMC has been building manufacturing facilities in the US since 2020 and has continued to increase its investment in the country. In March, the company announced its intention to invest another $100 billion, increasing its total planned investment to $165 billion.
The Trump administration recently proposed a 100% tariff on semiconductors, but said businesses investing in the US will be exempt. The US and Taiwan also remain trade negotiations that are likely to affect tariff rates for Taiwanese companies.
