Taiwanese semiconductor manufacturing company at Hsinchu Science Park.
Annabellechee | Getty Images News | Getty Images
Taiwan will not accept Washington’s proposal to locally manufacture half of the chips it currently supplies to the US, said the island’s top trade negotiator.
Chen Lee Chi-wun, who is also the country’s deputy prime minister, said Wednesday that the proposal to split the “50-50” in semiconductor production had not even been debated as she returned from trade talks in the US.
Cheng said the talks focus on lowering tariff charges, accumulating tariffs – ensuring exemptions from additional obligations and reducing taxes on Taiwan’s exports. Taiwan is currently facing a 20% “mutual” tariff rate.
Washington discussed with Taipei about the division of the “50-50” in Taiwan’s production. It reduces America’s dependence on Taiwan, Secretary Howard Lutnick said in an interview with News Nation last weekend, adding that 95% of US demand has now been met through chips produced within Taiwan.
“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.”
President Donald Trump had accused the US chip business of “stealing” earlier this year, aiming to control Chips Island.
The US Trade Representative and the Taiwan Ministry of Economy did not immediately respond to CNBC’s request for comment.
Lutonic’s proposal has been criticized by Taiwanese politicians, calling it an “act of exploitation and looting” by Eric Chu, the island’s leading opposition party, Quo Mingtan.
“No one can sell out Taiwan or TSMC, and no one can damage Taiwan’s silicon shield,” Chu said. Taiwan Semiconductor Manufacturing Companya world leader in advanced chip manufacturing.
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.
In an interview with News Nation, Lutnick down the “silicon shield” and argued that Taiwan is safer with a more balanced chip production between Washington and Taipei. Beijing saw the democratically governed Taiwan Island as its own territory and vowed to reclaim it with force if necessary, but Taipei rejects those claims.
Taiwan People’s Party Chairman Huang Kuo-chan reportedly called Lutnick’s proposal an attempt to “drive the foundations of Taiwan’s technical sector.”
