Impossible to Shift 40% of Our Chip Capacity to US: Taiwan
The global semiconductor industry has been abuzz with the recent announcement by Taiwan’s Vice Premier, Cheng Li-chiun, stating that shifting 40% of the country’s chip capacity to the United States is “impossible”. This statement comes amidst growing pressure from the US government on Taiwanese chip manufacturers to relocate a significant portion of their production to American soil. In this blog post, we will delve into the implications of this statement and explore the reasons behind Taiwan’s stance.
The US government has been actively encouraging Taiwanese chip firms to build manufacturing facilities in the United States, with the goal of reducing dependence on foreign suppliers and enhancing national security. However, Taiwan’s Vice Premier Cheng Li-chiun has made it clear that such a massive shift in production capacity is not feasible. “Our overall capacity [in Taiwan] will…continue to grow. But we can expand our presence in the US,” she added, indicating that while Taiwan is open to expanding its presence in the US, it is not willing to compromise its existing production capacity.
The US Commerce Secretary, Howard Lutnick, had earlier warned that Taiwanese chip firms could face a 100% tariff if they fail to build manufacturing facilities in the US. This threat has been seen as an attempt to coerce Taiwanese companies into relocating their production to the US, but it appears that Taiwan is not willing to bow to such pressure. The Taiwanese government has made it clear that it will continue to prioritize the growth and development of its domestic semiconductor industry, rather than compromising its existing capacity to meet US demands.
So, why is it impossible for Taiwan to shift 40% of its chip capacity to the US? There are several reasons that contribute to this impossibility. Firstly, the semiconductor industry is a complex and highly specialized field that requires significant investment in infrastructure, technology, and human resources. Building a new manufacturing facility in the US would require a massive investment of time, money, and resources, which would be difficult for Taiwanese companies to undertake.
Secondly, Taiwan has a well-established ecosystem for semiconductor manufacturing, with a highly skilled workforce, advanced infrastructure, and a strong network of suppliers and partners. Replicating this ecosystem in the US would be a daunting task, requiring significant investment and effort. Moreover, the US lacks the same level of expertise and experience in semiconductor manufacturing as Taiwan, which would make it difficult for Taiwanese companies to find the necessary talent and resources to establish a new manufacturing facility.
Thirdly, the Taiwanese government has made significant investments in the development of its domestic semiconductor industry, and it is unlikely to compromise its existing capacity to meet US demands. The government has implemented various policies and initiatives to support the growth of the industry, including investments in research and development, talent acquisition, and infrastructure development. As a result, Taiwan has become a global leader in semiconductor manufacturing, and it is unlikely to give up its competitive advantage by shifting a significant portion of its production to the US.
Finally, the threat of a 100% tariff on Taiwanese chip firms that fail to build in the US is unlikely to be effective in coercing Taiwanese companies into relocating their production. While the tariff would undoubtedly have a significant impact on the profitability of Taiwanese companies, it is unlikely to be enough to convince them to undertake the massive investment required to establish a new manufacturing facility in the US. Moreover, the Taiwanese government has made it clear that it will continue to support its domestic semiconductor industry, and it is likely to find ways to mitigate the impact of any tariffs imposed by the US.
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” reflects the complexity and challenges involved in relocating a significant portion of Taiwan’s semiconductor manufacturing capacity. While the US government may continue to pressure Taiwanese chip firms to build manufacturing facilities in the US, it is unlikely to succeed in its efforts to coerce them into compromising their existing production capacity. As the global semiconductor industry continues to evolve, it will be interesting to see how the US and Taiwan navigate their relationship and find ways to cooperate on issues related to semiconductor manufacturing.
News Source: https://www.reuters.com/world/china/taiwan-says-40-shift-chip-capacity-us-is-impossible-2026-02-09/
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