Taiwan Rejects US Proposal to Split Chip Production 50-50

The Government of the Republic of China rejected a proposal from U.S. Secretary of Commerce Howard Lutnick to split semiconductor production 50-50 between Taiwan and the United States. Lutnick argued that onshoring manufacturing is vital for American national defense and reduces a 95% reliance on Taiwanese chips, which he characterized as a single point of failure for the global economy.

Vice Premier Cheng Li-chiun, leading tariff negotiations in Washington, denied that a 50-50 split was formally agreed upon or even discussed during recent talks. Instead, Taiwan proposed a Taiwan model of strategic partnership, offering to expand U.S. production capacity and provide investment insurance to companies without relocating existing supply chains. This effort aims to reduce a 20% provisional tariff on Taiwanese exports imposed by the administration of President Donald Trump.

Taiwanese officials and opposition leaders, including Kuomintang Chairman Eric Chu, condemned the U.S. demand as exploitation that would hollow out the technology sector. They argue that maintaining dominance in advanced chip manufacturing creates a silicon shield that deters Chinese military aggression. While TSMC is investing $165 billion in Arizona plants, the company maintains that its most advanced processes must remain in Taiwan. Nvidia CEO Jensen Huang noted that full supply chain independence is not practical for a decade or two.

Despite these geopolitical tensions, TSMC continues to see record growth, projecting a 28% increase in third-quarter net profit driven by AI demand. The company has already sold out its 2nm wafer capacity for 2026 across its Hsinchu and Kaohsiung facilities.