Taiwan has firmly rejected the United States' proposal to relocate 40% of its semiconductor supply chain to the U.S., according to the country's top trade negotiator. In a recent interview, Vice Premier Cheng Li-chiun emphasized that Taiwan's semiconductor industry, a cornerstone of its economy, cannot be easily uprooted. The country's strategy for international expansion, including investments in the U.S., hinges on maintaining a strong presence in Taiwan and further domestic investments. This stance directly contradicts U.S. Commerce Secretary Howard Lutnick's January remarks, where he aimed to shift 40% of Taiwan's chip production to the U.S. within the Trump administration's term. The U.S.-Taiwan trade agreement, which includes substantial investments and tax incentives, has sparked debates about the feasibility of such a relocation. While Taiwan Semiconductor Manufacturing Co. (TSMC) has already committed billions to U.S. manufacturing, the broader chip supply chain involves numerous smaller companies. Lutnick's ambitious plans to build giant industrial parks in the U.S. and impose tariffs on non-U.S. producers have raised concerns among analysts. They argue that the complex and highly integrated nature of the semiconductor industry makes large-scale relocation challenging. Additionally, the geopolitical implications of Taiwan's role in the global chip supply chain, known as the 'Silicon Shield' theory, suggest that safeguarding its autonomy is a strategic U.S. interest, potentially deterring Chinese aggression. This theory further complicates the prospect of Taiwan shifting its supply chains abroad. Taiwan's authorities have implemented policies, such as the N-2 rule, to protect its semiconductor industry, making it even more difficult for TSMC's overseas plants to operate at the cutting edge of technology.
