Taiwan Semiconductor Manufacturing Company's logo is seen in the background beside a printed circuit board.
Taiwan has told Washington that its proposal to move 40% of the island's semiconductor supply chain to the U.S. was "impossible," the country's top tariff trade negotiator said in an interview.
Speaking on a local television broadcast Sunday, Vice Premier Cheng Li-chiun said she had made it clear to Washington that the country's semiconductor ecosystem, built up over decades, could not simply be relocated.
The comments push back against onshoring targets outlined by U.S. Commerce Secretary Howard Lutnick in a CNBC interview in January, shortly after the latest U.S.-Taiwan trade agreement. Lutnick said he wanted 40% of Taiwan's entire chip supply chain to shift to the U.S. within President Donald Trump's ongoing term.
Under the deal, the Taiwanese government promised $250 billion in direct investments by its tech companies, with an additional $250 billion in credit provided for them to expand their production capacity in the U.S. In return, Taiwanese companies were promised higher quotas for tariff-free exports of their chips to the U.S.
Taiwan Semiconductor Manufacturing Co, the world's leading contract chipmaker and producer of the most advanced semiconductors, has already been working to better align with U.S. policy interests.
The company has committed more than $65 billion to U.S. manufacturing in recent years, with plans to expand that to $165 billion, as it produces chips for American clients Apple and Nvidia. The investments have also leveraged grants under the U.S. CHIPS and Science Act.
But according to Lutnick, Washington is also looking for hundreds of other smaller companies in the chip supply chain to come to the U.S.
"We're going to build giant semiconductor industrial parks in America ... This is a $500 billion down payment on let's bring those semiconductors home," he said in January, adding that Taiwan-based chip companies that don't build in the U.S are likely to face a 100% tariff.
However, semiconductor analysts broadly agree with Cheng's assessment that Washington's most ambitious onshoring plans are unfeasible, citing the difficulties of relocating such an advanced supply chain.
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