Taiwan will not agree to 50-50 chip production deal with US, negotiator says

Background

Recently, the Trump administration has taken frequent actions to strengthen U.S. semiconductor manufacturing capacity.

From the earlier announcement that TSMC would expand its investment by an additional USD 100 billion—on top of its existing USD 65 billion—to build a total of six wafer fabs, two advanced packaging plants, and a new R&D center, to the U.S. government’s move to exchange chip subsidies for a 10% stake in Intel to support its foundry business and advanced process mass production.



Commentary

Last Saturday, U.S. Secretary of Commerce Howard Lutnick further raised the idea of a 50-50 split in making chips between Taiwan and the U.S., arguing that America must have sufficient domestic semiconductor capacity in order to provide immediate protection should China take action against Taiwan. This suggests that Washington is attempting to shift Taiwan’s long-standing ‘silicon shield’ from a unilateral national security safeguard to a shared U.S.–Taiwan security responsibility, pushing to localize Taiwan’s advanced semiconductor processes in the U.S. Otherwise, the U.S. threatens to impose high tariffs as a penalty to accelerate Taiwanese firms’ pace of building fabs and establishing operations in America.

Although Taiwan Vice Premier Cheng Li-chiun clarified that the fifth round of in-person negotiations did not include a 50-50 chip capacity proposal, she also stressed that Taiwan would not accept such an arrangement. The negotiations instead focused on ensuring that the 20% tariffs would not be compounded, explored tariff concessions under Section 232, and discussed possible supply chain cooperation. For Taiwan, the key impact lies in how domestic chipmakers allocate resources between Taiwan and the U.S., while facing the challenge of preserving technological advantages, core intellectual property, and operational control under international cooperation. At the same time, it will test how the Taiwanese authorities can leverage existing strengths to secure supply chain agreements that protect the interests of local chipmakers while satisfying Washington’s demands.