News

The island nation is the biggest producer of semiconductors in the world and maintaining this dominance is about more than just the economy.

This week, the Taiwanese government has denied that they are considering shifting 50% of their semiconductor manufacturing operations to the US, despite statements made to the contrary by US Commerce Secretary Howard Lutnick earlier this week.

Speaking to NewsNation on Tuesday, Lutnick said that his latest trade talks with Taiwan had included discussions of shifting up to half of the country’s chip production to the US.

“That’s been the conversation we had with Taiwan, that you have to understand it’s vital for you to have us produce 50%,” said Lutnick in an interview with NewsNation.

Taiwan is the world’s largest producer of semiconductors, with Taiwan Semiconductor Manufacturing Company (TSMC) controlling over 68% of global semiconductor foundry revenue at the end of 2024, according to data from TrendForc, Second-place producer, South Korea’s Samsung, accounts for just 8%.

On Wednesday, however, Taiwan’s Vice Premier Cheng Li-chiun rejected the suggestion that the matter had even been discussed.

“Our negotiating team has never made any commitment to a 50-50 split on chips. Rest assured, we did not discuss this issue during this round of talks, nor would we agree to such conditions,” said Cheng, according to Taiwan’s official Central News Agency.

Instead, Cheng said the discussions were focussed on resolving issues surrounding tariffs and the US’s Section 232 investigations, which seek to probe whether imported goods represent a threat to national security.

Taiwan’s exports to the US are currently subject to a 20% tariff, with the island’s government hoping to negotiate this rate’s reduction.

The rapid expansion of the US’s domestic chip production capabilities has been a focus for the government since the start of the decade, when the coronavirus pandemic exposed the fragility of global supply chains. The Biden-era CHIPS and Sciences Act – described by President Trump as a “horrible, horrible thing” – has set aside $39 billion in subsidies for domestic chip production, encouraging major investments from giants like Intel, Micron, and Samsung.

The subsidies even proved enough of a lure to draw interest from TSMC, which announced a $65 billion commitment in 2024 to build three greenfield fabs in Phoenix, Arizona, supported by $6.6 billion in US subsidies. Earlier this year, this investment was scaled up by a further $100 billion.

This investment, however, is seemingly not enough for the US government, which wants far less reliance on overseas production.

Naturally, the elephant in the room during discussions are the major geopolitical factors in play. Taiwan is under constant existential threat from China, and the vital role its semiconductor industry plays in the global tech supply chain is a key reason for its US support. Moving chip production to the US would not only be a technical and economic challenge for Taiwan, but a disintegration of the nation’s so-called ‘Silicon Shield’, removing its largest deterrent against Chinese invasion.

With news published just this week that Russia is reportedly helping China plan an invasion of Taiwan, the country is surely less motivated than ever to hand over its technological crown jewels.

Keep up to date with all of the latest telecoms news from around the world with the Total Telecom newsletter

Also in the news
Connected Britain Award winners 2025 announced!
Netomnia announces ‘powerful and ambitious’ rebrand ahead of Connected Britain
VodafoneThree drops Samsung, relies on Nokia and Ericsson for £2bn network upgrade