Commerce Secretary Wants a ‘50-50’ Semiconductor Production Split Between US and Taiwan
Udumbara
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The Trump administration wants Taiwan to move half of its semiconductor production to the United States, a move that could have an impact on the island nation’s self-defense against communist China’s military aggression.
“My objective, and this administration’s objective, is to get chip manufacturing significantly onshored—we need to make our own chips,” Lutnick said.
Lutnick said that Taiwan’s proximity to China and its distance from the United States raise concerns about the island producing “95 percent of our chips.”
“The Chinese have said, ‘We’re going to take Taiwan,’” Lutnick stated. “Like, they’re not even shy about it. So this is an issue.”
Taiwan’s dominant role in global chip manufacturing, led by chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), has been labeled as a deterrent against the Chinese regime’s military aggression, a concept known as the “silicon shield.”
According to Taiwan’s national media outlet, Central News Agency (CNA), Taiwan’s exports to the United States were valued at $111.4 billion in 2024, of which $7.4 billion was attributed to semiconductors.
Asked about Taiwan’s “silicon shield,” Lutnick suggested that Taiwan would be better off with more evenly allocated chip production between the United States and Taiwan.
“My argument to [Taiwan] was, well, if you have 95 percent [of semiconductor production], how am I going to get it to protect you? You’re going to put it on a plane? You’re going to put it on a boat? We need enough production [in the United States],” Lutnick said.
“So the idea that I pitched them was, let’s get to 50-50. We’re producing half, and you’re producing half.
“We’re still fundamentally reliant upon you because we cannot live without the other half. But if we have half, we have the capacity to do what we need to do, if we need to do.
“That has been the conversation we had with Taiwan, [telling them] that ‘you have to understand it’s vital for you to have us produce 50 percent.’”
Ultimately, the goal is for the United States to capture at least 40 percent of the semiconductor market, which would require $500 billion in domestic investment, Lutnick said.
In response to Lutnick’s comments, the Office of Trade Negotiations of Taiwan’s Executive Yuan, the highest administrative organ in Taiwan, said that it would exercise prudence in trade negotiations with the United States, according to Taiwanese media outlets.
Liu Pei-chen, a researcher at the Taiwan Institute of Economic Research, a government-funded think tank, told CNA on Sept. 29 that Lutnick’s comments suggest that the United States is effectively redefining the term “silicon shield”—shifting the core of the strategy from Taiwan’s exclusive chip dominance to a mutual reliance built on shared manufacturing capacity.
Liu suggested that Washington could pressure TSMC to accelerate the construction of its U.S. factories and increase its investments in the United States.
Then in March, TSMC announced its plan to invest an additional $100 billion—on top of its previous $65 billion investment—in building three new fabrication plants, two advanced packaging facilities, and a major research and development team center.
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