Taiwan pushes back on US calls for major chip shift, says moving 40 percent of capacity is unrealistic

Taiwan has firmly rejected suggestions that nearly half of its semiconductor manufacturing capacity could be relocated to the United States, underscoring the depth and complexity of an industry ecosystem that officials say cannot simply be transplanted overseas. The response follows renewed calls from Washington for a large scale shift of advanced chip production as part of broader efforts to strengthen domestic supply chains.

Speaking in a televised interview, Taiwan Vice Premier Cheng Li-chiun said it would be impossible to move 40 percent of the island’s semiconductor capacity to the United States. She emphasized that Taiwan’s chip industry is the result of decades of coordinated investment, talent development, infrastructure planning, and close integration between manufacturers, suppliers, and research institutions.

Cheng said she had made Taiwan’s position clear to US officials, stressing that while the island is open to expanding its global footprint, its semiconductor base will remain firmly anchored at home. According to her, Taiwan’s overall chipmaking capacity will continue to grow domestically even as companies pursue selective investments abroad.

The comments came after US Commerce Secretary Howard Lutnick reiterated Washington’s goal of bringing a substantial share of advanced semiconductor manufacturing back to the United States. Lutnick has argued that concentrating a large portion of global chip production close to China poses strategic risks, and has floated a target of achieving 40 percent market share in leading edge manufacturing by the end of the current US administration.

Taiwanese officials have acknowledged US security and supply chain concerns, but say expectations of a sweeping relocation misunderstand how the industry works. Cheng noted that Taiwan’s science parks, which house dense clusters of fabs, equipment suppliers, materials producers, and specialized service firms, will not be relocated. Instead, Taiwan is willing to share its experience in building such clusters to help the United States develop a more self sustaining semiconductor ecosystem.

The two sides recently reached a tariff agreement that lowered US duties on Taiwanese exports while encouraging greater Taiwanese investment in the American market. Cheng said these overseas investments are being pursued on the condition that domestic expansion continues and remains the priority.

Taiwan’s confidence is rooted in the scale of its existing and planned projects across advanced manufacturing, advanced packaging, and the broader supply chain. Officials say that when current fabs, facilities under construction, and future projects are combined, Taiwan’s total semiconductor capacity will far exceed what it invests in any single overseas location.

At the center of this dynamic is TSMC, which has committed to building multiple fabs in the US state of Arizona with planned investment totaling $165 billion. While this marks one of the largest foreign industrial investments in US history, Taiwanese officials point out that it still represents only a portion of the company’s global operations, the majority of which remain in Taiwan.

The exchange highlights the balancing act facing Taiwan as it deepens economic ties with the United States while safeguarding a semiconductor industry that is critical to its economy and strategic relevance. For now, Taipei’s message is clear. International expansion is possible, but a wholesale shift of Taiwan’s chipmaking core is not.