It looks like Taiwan does not want to partner with the U.S. when it comes to chip production.
Taiwan will not accept Washington’s proposal to locally manufacture half the chips it currently supplies to the U.S., the island’s top trade negotiator said.
Speaking to reporters, Cheng Li-chiun, also the country’s vice premier, said on Wednesday that the proposal for a “50-50” split in semiconductor production was not even discussed, as she returned from trade talks in the U.S., according to Taiwan’s Central News Agency.
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Washington has held discussions with Taipei about the “50-50” split in semiconductor production, which would cut American reliance on Taiwan, Commerce Secretary Howard Lutnick said last weekend in an interview to NewsNation, adding that currently 95% of the U.S. demand was met via chips produced within Taiwan.
“My objective, and this administration’s objective, is to get chip manufacturing significantly onshored — we need to make our own chips,” Lutnick said. “The idea that I pitched [Taiwan] was, let’s get to 50-50. We’re producing half, and you’re producing half.”
Lutnick’s proposal has been condemned by Taiwan’s politicians, with Eric Chu, chairman of the island’s principal opposition party Kuomintang, calling it “an act of exploitation and plunder,” according to the Central News Agency report.
“No one can sell out Taiwan or TSMC, and no one can undermine Taiwan’s silicon shield,” Chu said, referring to Taiwan Semiconductor Manufacturing Company, the world’s leader in advanced chip manufacturing.
The United States imposed a 32% tariff on select Taiwanese exports, effective April 9, as part of a broader strategy to address significant trade imbalances. This came after President Donald Trump announced a universal 10% tariff on all imports starting April 5, with additional country-specific tariffs for nations with large surpluses. Taiwan’s electronic components, high-tech machinery, and industrial goods were the primary targets, while semiconductors and other critical sectors were exempted to maintain strategic economic interests.
The Taiwanese government strongly opposed the tariffs, labeling them “deeply unreasonable” and warning of potential negative impacts on its economy. Forecasts suggested the tariffs could slow Taiwan’s GDP growth by up to 1.6 percentage points, raising concerns over supply chain disruptions and diminished competitiveness in the U.S. market.
Rather than retaliate, Taiwan opted for a diplomatic approach focused on negotiation and cooperation. Taiwanese officials engaged in talks with the U.S. to seek tariff reductions and explore expanded bilateral industrial partnerships, particularly in high-tech fields.
Taiwan’s “Taiwan model” emphasizes strategic investment, government support, and the development of Taiwan-U.S. industrial clusters to strengthen economic ties while minimizing supply chain relocations. President Lai Ching-te also announced plans to purchase $10 billion in U.S. agricultural goods, signaling a commitment to cooperation amid tensions. Both sides aim to balance fair trade with economic stability as geopolitical complexities continue to evolve.
Taiwan’s rejection of a proposed 50-50 chip production split with the U.S. has significant implications for America’s tech and national security strategy. The U.S. has been pushing to reduce its reliance on foreign semiconductor manufacturing—especially Taiwan, which currently produces over 60% of the world’s chips and more than 90% of the most advanced ones. A 50-50 production model was seen as a step toward reshoring critical infrastructure and mitigating risks tied to geopolitical tensions with China.
With Taiwan unwilling to divide production evenly, the U.S. now faces a tougher road in achieving chip independence. It will have to rely more heavily on domestic incentives, like the CHIPS Act, to attract investment and scale up manufacturing at home. Taiwan’s stance also underscores that while it’s willing to partner strategically, it won’t cede control of its competitive edge.
This rejection may also strain trade negotiations, especially around tariff reductions the U.S. has tied to deeper semiconductor cooperation. Ultimately, the U.S. must now rethink how to build resilience in its chip supply chain, possibly by diversifying partnerships beyond Taiwan, fast-tracking domestic fab development, and investing in workforce and R&D, without expecting foreign partners to significantly shift production offshore.