Key Points
- Taiwan has rejected a U.S. demand to move 50% of its chip production to America.
- The U.S. sees its reliance on Taiwan for chips as a national security risk. Taiwan views its chip industry as a “silicon shield” that protects it from China.
- The demand has caused a backlash in Taiwan, with critics calling it an “outright plunder.”
- The rejection comes despite TSMC’s existing commitment to invest $165 billion in new U.S. factories.
Taiwan has forcefully rejected a demand from the Trump administration to move half of its semiconductor production to the United States. The defiant stance sets up a major clash between Washington and the self-ruled island, which is home to the world’s most important chipmaker, TSMC.
The U.S. has become increasingly worried about its heavy reliance on Taiwan for the advanced chips that power everything from iPhones to AI and military hardware. U.S. Commerce Secretary Howard Lutnick recently sparked alarm by demanding that Taiwan split its chip production 50-50 between domestic and U.S. facilities, arguing it was a matter of national security.
But Taiwan sees its dominance in chipmaking as a “silicon shield”—a crucial strategic asset that helps deter a potential invasion from China. Shifting so much production to the U.S. would, in their view, weaken that shield and undermine their security.
Taiwan’s Vice Premier, Cheng Li-chiun, made the government’s position crystal clear on Wednesday, stating that Taiwan “will not agree” to the 50-50 split. “Our negotiating team has never made any commitment to splitting chips 50-50, so the public can rest assured,” she said.
The U.S. demand has also drawn fierce criticism within Taiwan, with one opposition lawmaker calling it an “outright plunder” that would amount to “selling out the nation.” This comes after TSMC has already committed to a massive $165 billion investment in building new factories in Arizona, a move that was already controversial in Taiwan.
