Taiwan rejects US push for 50-50 chip production split amid tariff talks

Taipei rules out Washington’s proposal as TSMC doubles down on local manufacturing despite $165 billion US investments

Taiwan has made it clear it will not accept any US demand requiring half of its semiconductor production to shift abroad. The response came after a Reuters report citing US Commerce Secretary Howard Lutnick, who told News Nation that Washington wanted a 50-50 split in chip production between Taiwan and the United States.

For Taipei, which produces the vast majority of the world’s advanced chips, the idea was a non-starter.

Returning from tariff negotiations in Washington, Vice Premier Cheng Li-chiun told reporters at the airport that Taiwan had “never discussed” such a proposal during talks.

“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,” Cheng said, according to Reuters.

The rejection underscores how sensitive Taiwan is about keeping its role as the world’s semiconductor stronghold intact.

The US currently imposes a 20 percent tariff on Taiwan’s exports, despite the island running a hefty trade surplus with Washington. Taipei has been pressing for tariff relief, with both Cheng and Premier Cho Jung-tai telling lawmakers that the recent rounds of negotiations yielded “certain progress”.

President Lai Ching-te also met with Luke J Lindberg, US Under Secretary for Trade and Foreign Agricultural Affairs, in a sign that broader trade diplomacy is underway beyond chips.

Taiwan’s semiconductor giant TSMC has committed $165 billion to build factories in Arizona, a move that aligns with US efforts to secure domestic chip production. But the company has made clear that most of its manufacturing capacity will remain in Taiwan — particularly the cutting-edge nodes critical for artificial intelligence and high-performance computing.

Demand for AI chips has supercharged TSMC’s business, and analysts note that keeping production concentrated at home ensures strategic leverage for Taiwan’s government while still expanding its global footprint.