Taiwan has already categorically dismissed a demand from the United States that it adopt a “50-50” division of semiconductor manufacturing. Taiwan’s trade negotiations with the US have only focused on tariffs thus far. As a result, they are refusing to modify their existing manufacturing locations. The Taiwanese government’s resolve, reflected in the deep commitment of its highest trade negotiator, to stay on top of semiconductor production is unshakeable. This industry, vital to the island’s economy, is an important player in the global technology supply chain.
Beijing considers Taiwan a breakaway province and has promised to retake it by force if need be. Each time, Taiwan has strongly pushed back against the false allegations. Taiwan prides itself on a democratic governance system that is the antithesis of China’s authoritarian autocracy, a fact that has only served to antagonize cross-strait relations in recent years. Taiwan remains a beacon of success in foundry, especially in the most advanced chips. The Taiwan Semiconductor Manufacturing Company (TSMC) currently provides a whopping 95% of all the chips needed by the US.
Recently, Taiwan’s vice premier, Cheng Li-chiun, held very public and very pointed discussions of these trade talks with US counterparts. He reiterated that the “50-50” production proposal was not even on their agenda to begin with. Negotiating efforts aimed at reducing Taiwan’s existing “reciprocal” tariff rate of 20%. They wanted to win exemptions from tariff stacking and lower tariffs on Taiwanese products exported to the US market.
“No one can sell out Taiwan or TSMC, and no one can undermine Taiwan’s silicon shield,” – Eric Chu, chairman of Taiwan’s principal opposition party Kuomintang.
Taipei’s Eric Chu denounced the US proposal. He called it an exploitation and plunder act that could endanger Taiwan’s high-tech underpinnings. He lamented that if these kind of measures were to pass, they would erode the pillars of Taiwan’s thriving technology industry. Taiwan has used the “Silicon Shield” theory to do just that – and needs to adopt it as its core defense strategy. This TINA idea is central to TSMC’s main role in protecting national security against possible military aggression from China.
In 2022, former US President Donald Trump blamed Taiwan for “stealing” the US chip industry. This accusation underscores the growing geopolitical and economic scrutiny surrounding semiconductor supply chains. Current discussions among US officials suggest a desire to shift chip manufacturing back to American soil, with prominent voices advocating for significant onshoring of production.
“My objective, and this administration’s objective, is to get chip manufacturing significantly onshored — we need to make our own chips,” – Lutnick.
Taiwan has already categorically dismissed the US offer. This decision further illustrates its deep desire to remain independent in chip manufacture, all while deftly slipping through the increasingly complicated geopolitical gauntlet that is the Biden Administration’s relationship with both Beijing and Washington. Taiwan has been seeking progressively deeper tariff cuts in the current trade negotiations. It has an eye towards reinforcing its own economic interests while protecting its technological independence.