Taiwan Says 40% Shift Of Semiconductor Manufacturing To US ‘Impossible’ Amid Trade Pressure

The comments come amid growing pressure from Washington to diversify advanced chip production away from Asia, particularly from locations seen as geopolitically sensitive.

From artificial intelligence and electric vehicles to defence systems and consumer electronics, advanced chips underpin modern industry.

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Taiwan has firmly rejected suggestions that it could shift 40 per cent of its semiconductor manufacturing capacity to the United States, calling such a move “impossible” and underscoring the deep roots of its chip ecosystem at home.

The comments come amid growing pressure from Washington to diversify advanced chip production away from Asia, particularly from locations seen as geopolitically sensitive. But Taipei has made it clear: while it is willing to expand investment abroad, the heart of its semiconductor industry will remain on the island, reported Reuters.

‘Impossible’ to Move 40 Per Cent

In an interview with Taiwanese television channel CTS, broadcast late on Sunday, Taiwan Vice Premier Cheng Li-chiun addressed calls from American officials for a substantial relocation of semiconductor production to US soil.

Cheng said she had directly conveyed to Washington that the proposal to move 40 per cent of Taiwan’s chipmaking capacity was not feasible. The semiconductor ecosystem built up over decades on the island could not simply be uprooted and transplanted elsewhere, she stressed.

She reiterated that Taiwan’s manufacturing base would continue to expand domestically, even as companies pursue overseas investments. Overall capacity in Taiwan, she said, would only continue to grow.

While acknowledging that Taiwan could increase its footprint in the United States, Cheng emphasised that international expansion would be grounded in a commitment to remain firmly anchored at home.

Washington’s Strategic Push

The US has been vocal about its desire to reduce reliance on overseas semiconductor manufacturing, particularly production concentrated close to China.

Earlier this week, US Commerce Secretary Howard Lutnick argued that it made little sense for the bulk of global semiconductor production to be located just 80 miles from China. In remarks outlining the administration’s ambition, he said the goal was to secure a 40 per cent market share in leading-edge semiconductor manufacturing in the US by the time the current administration leaves office.

In a separate interview with CNBC last month, Lutnick suggested that if a substantial shift of Taiwan’s chip supply chain and production did not materialise, tariffs on Taiwanese goods could rise sharply, potentially to 100 per cent.

He has previously floated the idea of a 50-50 split in chip production between Taiwan and the United States, a suggestion that Taipei rejected at the time.

A Deal on Tariffs, But Not on Relocation

Despite the tension over production targets, Taiwan and the US reached an agreement last month to reduce tariffs on the island’s exports to 15 per cent from 20 per cent. As part of the arrangement, Taiwan committed to increasing investment in the United States.

However, Cheng made clear that while investment flows could grow, relocation of Taiwan’s science parks, the backbone of its semiconductor cluster, was not on the table.

Instead, she suggested Taiwan could share its expertise in building and managing industry clusters, helping the US cultivate a similar environment rather than physically transferring capacity.

Capacity at Home to Outpace Overseas Growth

Cheng also expressed confidence that Taiwan’s semiconductor capacity, including existing facilities, projects under construction and planned expansions across advanced manufacturing, advanced packaging and the wider supply chain, would far exceed the scale of its investments in the United States or any other country.

Her remarks highlight Taipei’s broader strategy: support global diversification without undermining the island’s dominant position in advanced chip production.

TSMC’s Expanding US Footprint

Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chipmaker, is already deepening its presence in the United States. The company has committed $165 billion to build factories in the state of Arizona, marking one of the largest foreign direct investments in US manufacturing history.

That expansion underscores Taiwan’s willingness to cooperate with Washington’s push for supply chain resilience.

A Semiconductor Tug of War

Semiconductors sit at the centre of global economic and national security concerns. From artificial intelligence and electric vehicles to defence systems and consumer electronics, advanced chips underpin modern industry.

For the US, increasing domestic production is about security and competitiveness. For Taiwan, retaining manufacturing leadership is about economic survival and geopolitical leverage.

As negotiations and political rhetoric intensify, one message from Taipei is unmistakable: Taiwan is open to partnership and overseas expansion, but a wholesale shift of its semiconductor backbone is simply not realistic.

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