Impossible to shift 40% of our chip capacity to US: Taiwan
The semiconductor industry has been a topic of intense discussion in recent years, with countries around the world vying for a larger share of the global chip production market. Taiwan, home to some of the world’s leading chip manufacturers, including Taiwan Semiconductor Manufacturing Company (TSMC), has been at the forefront of this discussion. Recently, Taiwan’s Vice Premier Cheng Li-chiun made a statement that has sent ripples through the industry, saying that shifting 40% of the country’s semiconductor capacity to the US “is impossible”.
This statement comes on the heels of comments made by US Commerce Secretary Howard Lutnick, who warned Taiwanese chip firms that they could face a 100% tariff if they fail to build manufacturing facilities in the US. The US has been actively courting Taiwanese chip manufacturers to set up shop in the country, as part of its efforts to reduce its reliance on foreign-made semiconductors and boost domestic production. However, it seems that Taiwan is not willing to comply with the US’s demands, at least not to the extent that the US is hoping for.
According to Vice Premier Cheng, while Taiwan is open to expanding its presence in the US, shifting 40% of its chip capacity to the country is simply not feasible. “Our overall capacity [in Taiwan] will…continue to grow. But we can expand our presence in the US,” she said. This statement suggests that Taiwan is willing to cooperate with the US and increase its investment in the country, but it will not come at the expense of its domestic industry.
So, why is Taiwan hesitant to shift its chip production to the US? One reason is the significant investment that has already been made in Taiwan’s semiconductor industry. The country has spent decades building up its chip manufacturing infrastructure, and it has become a major hub for the industry. Shifting 40% of its capacity to the US would require a massive investment of time, money, and resources, which would be difficult to justify, especially given the uncertainty surrounding the US’s trade policies.
Another reason is the potential impact on Taiwan’s economy. The semiconductor industry is a significant contributor to Taiwan’s GDP, and a major shift in production capacity could have far-reaching consequences for the country’s economy. Taiwan is already facing significant competition from other countries, including China, South Korea, and the US, and it cannot afford to compromise its domestic industry.
The US’s threat of a 100% tariff on Taiwanese chip firms that fail to build in the US is also seen as a major sticking point. While the US is trying to use this as a lever to persuade Taiwanese companies to set up manufacturing facilities in the country, it is unlikely to have the desired effect. Taiwanese companies are already facing significant challenges in the global market, and the threat of a tariff is unlikely to persuade them to make a major shift in their production capacity.
In fact, the US’s approach has been criticized by some as being too aggressive and confrontational. Rather than trying to strong-arm Taiwanese companies into building in the US, the US could be working to create a more favorable business environment that would encourage companies to invest in the country. This could include offering incentives such as tax breaks, subsidies, and investment in infrastructure, rather than relying on threats and tariffs.
In conclusion, Taiwan’s Vice Premier Cheng Li-chiun’s statement that shifting 40% of the country’s chip capacity to the US “is impossible” is a significant development in the ongoing discussion about the global semiconductor industry. While the US is keen to reduce its reliance on foreign-made semiconductors and boost domestic production, Taiwan is unlikely to comply with the US’s demands, at least not to the extent that the US is hoping for. Instead, Taiwan will continue to focus on growing its domestic industry, while also exploring opportunities to expand its presence in the US.
As the global semiconductor industry continues to evolve, it will be interesting to see how the US and Taiwan navigate their relationship and work together to promote the growth and development of the industry. One thing is certain, however: the US’s approach will need to be more nuanced and collaborative if it is to succeed in its efforts to boost domestic chip production.
Source: https://www.reuters.com/world/china/taiwan-says-40-shift-chip-capacity-us-is-impossible-2026-02-09/
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