By Matt Underwood It’s simply not feasible to shift 40% of Taiwan’s semiconductor manufacturing capacity to the United States. This sentiment comes directly from Taiwan’s top tariff negotiator, who has expressed this impossibility quite clearly. The idea of such a massive relocation, floated by some American officials, is met with a firm “impossible” from Taipei.
The core of the issue lies in Taiwan’s semiconductor ecosystem, a complex and deeply rooted industry that has been cultivated over decades. It’s not a matter of simply packing up factories and moving them. This intricate network of expertise, supply chains, and specialized infrastructure cannot be easily uprooted and transplanted.
Taiwan’s Vice Premier, Cheng Li-chiun, has been very direct in conveying this to Washington. She’s emphasized that Taiwan’s semiconductor strengths are a product of long-term development and that this core capacity will continue to grow within Taiwan itself.
While Taiwan is willing to increase its investment and presence in the United States, this expansion is predicated on a continued and robust commitment to its domestic industry. The strategy is one of international growth that stems from a strong Taiwanese foundation, not a replacement of that foundation.
The push from the U.S. side, particularly from Commerce Secretary Howard Lutnick, has been framed around national security concerns, citing the proximity of Taiwan to China as a point of vulnerability. The desire is to bring a significant portion of leading-edge semiconductor manufacturing back to American soil, with a stated goal of 40% market share.
This comes in the context of a recent tariff agreement between Taiwan and the U.S., which saw tariffs lowered in exchange for increased Taiwanese investment in America. However, this agreement doesn’t appear to accommodate the wholesale relocation of manufacturing capacity.
Taiwan’s stance is that while science parks and their foundational infrastructure will remain in Taiwan, the island is open to sharing its experience in building industrial clusters and assisting the U.S. in fostering a similar environment. The vision is not a zero-sum game where Taiwan’s gain in the U.S. means a loss at home.
In fact, Taiwan is confident that its total semiconductor capacity, encompassing existing facilities, those under construction, and future plans across advanced manufacturing and the broader supply chain, will comfortably outpace any investment made abroad.
The notion that Taiwan would willingly divest itself of its most critical industry, the very element that provides it with significant diplomatic leverage, seems counterintuitive. The argument is that Taiwan’s chip production is a key reason for its current de facto independence, and diminishing that presence would weaken its geopolitical standing.
Furthermore, the practicalities of building such advanced manufacturing capacity in the U.S. within a short timeframe are immense. The complexity of setting up new fabs, sourcing specialized equipment, and, crucially, training a skilled workforce are substantial hurdles that cannot be overcome overnight.
The idea of leveraging tariffs as a threat to force such a relocation also raises questions. Threatening to double the cost of chips, essential components for countless U.S. industries, seems like a self-defeating strategy.
There’s also a perception that such demands are rooted in a bullying tactic, a desire to unilaterally take what another nation possesses rather than fostering organic growth. The focus, some argue, should be on developing domestic U.S. industry while strategically enticing expertise and collaboration, not demanding a wholesale transfer of a sophisticated, decade-built ecosystem.
The concern is also raised that if Taiwan were to significantly diminish its chip-making prowess in favor of U.S. production, it could lose a crucial bargaining chip and potentially face abandonment in the face of geopolitical pressures, leaving it vulnerable to China. This perspective views the demand as a potential precursor to a scenario where the U.S. might disengage from defending Taiwan once its own semiconductor needs are met.
Ultimately, the message from Taiwan is clear: the island’s semiconductor heart will remain beating strongly at home, even as it seeks to expand its reach and investments internationally. The 40% shift is not just improbable; it’s viewed as fundamentally against Taiwan’s strategic interests and its ability to sustain itself.