A logo of the Taiwan Semiconductor Manufacturing Company (TSMC) displayed on a smartphone screen
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The Trump administration is pushing Taipei to shift investment and chip production to the U.S. in order that half of America’s chips are manufactured domestically, in a move that would have implications for Taiwan’s national defense.
Washington has held discussions with Taipei concerning the “50-50” split in semiconductor production, which might significantly reduce American dependence on Taiwan, U.S. Secretary of Commerce Howard Lutnick told News Nation in an interview released over the weekend.
Taiwan is alleged to supply over 90% of the world’s advanced semiconductors, which, in line with Lutnick, is cause for concern as a result of the island nation’s distance from the U.S. and proximity to China.
“My objective, and this administration’s objective, is to get chip manufacturing significantly onshored — we want to make our own chips,” Lutnick said. “The concept that I pitched [Taiwan] was, let’s get to 50-50. We’re producing half, and also you’re producing half.”
Lutnick’s goal is to achieve about 40% domestic semiconductor production by the top of U.S. President Donald Trump’s current term, which might take northwards of $500 billion in local investments, he said.
Taiwan’s stronghold on chip production is because of Taiwan Semiconductor Manufacturing Co., the world’s largest and most advanced contract chipmaker, which handles production for American tech heavyweights like Nvidia and Apple.
Taiwan’s critical position in global chips production is believed to have assured the island nation’s defense against direct military motion from China, also known as the “Silicon Shield” theory.
Nevertheless, in his News Nation interview, Lutnick downplayed the “Silicon Shield,” and argued that Taiwan could be safer with more balanced chip production between the U.S. and Taiwan.
“My argument to them was, well, if you will have 95% [chip production], how am I going to get it to guard you? You are going to put it on a plane? You are going to put it on a ship?” Lutnick said.
Under the 50-50 plan, the U.S. would still be “fundamentally reliant” on Taiwan, but would have the capability to “do what we want to do, if we want to do it,” he added.
Beijing views the democratically governed island of Taiwan as its own territory and has vowed to reclaim it by force if vital. Taipei’s current ruling party has rejected and pushed back against such claims.
This 12 months, the Chinese military has held quite a few large-scale exercises off the coast of Taiwan because it tests its military capabilities. During one in every of China’s military drills in April, Washington reaffirmed its commitment to supporting Taiwan.
More in return for defense
Lutnick’s statements on the News Nation interview aligned with past comments from Trump, suggesting that the U.S. should get more in return for its defense of the island nation against China.
Last 12 months, then-presidential candidate Trump had said in an interview that Taiwan should pay the U.S. for defense, and accused the country of “stealing” america’ chip business.
The U.S. was once a frontrunner in the worldwide semiconductor market, but has lost market share as a result of industry shifts and the emergence of Asian juggernauts like TSMC and Samsung.
Nevertheless, Washington has been working to reverse that trend across multiple administrations.
TSMC has been constructing manufacturing facilities within the U.S. since 2020 and has continued to ramp up its investments within the country. It announced intentions to take a position a further $100 billion in March, bringing its total planned investment to $165 billion.
The Trump administration recently proposed 100% tariffs on semiconductors, but said that firms investing within the U.S. could be exempt. The U.S. and Taiwan also remain in trade negotiations which can be more likely to impact tariff rates for Taiwanese businesses.
