Taiwan Faces Pressure to Shift Chip Production to US
▼ Summary
– The Trump administration is pressuring Taiwan to relocate 50% of its chip production to the US in exchange for protection against a potential Chinese invasion.
– Taiwan currently produces about 95% of chips used in smartphones, cars, and critical military technology, which the US views as a strategic vulnerability.
– US Commerce Secretary Lutnick aims to increase US chip production from 2% to 40% by bringing Taiwan’s entire supply chain to the US, though experts say this could take over a decade.
– Lutnick acknowledged the challenge is “herculean” and that convincing Taiwan to give up its dominant global chip role and associated protections is “not natural” for them.
– Nvidia’s CEO previously estimated the US is 10-20 years away from supply chain independence, highlighting the impracticality of rapid change.
The United States is reportedly urging Taiwan to relocate a significant portion of its advanced semiconductor manufacturing to American soil, framing the move as a strategic necessity for ensuring the island’s security. According to recent statements from US Commerce Secretary Howard Lutnick, Washington is pushing for Taiwan to transfer fifty percent of its chip production capacity to the US. This proposal is presented as a condition for continued American protection against potential military aggression from China.
Secretary Lutnick highlighted the critical nature of Taiwan’s semiconductor industry, which currently produces an estimated ninety-five percent of the world’s most advanced chips. These components are essential not only for consumer electronics like smartphones and automobiles but also for vital military defense systems. He expressed concern over the current geopolitical risk, pointing out that the vast majority of these crucial chips are manufactured thousands of miles away in a region facing persistent threats. The vulnerability of this supply chain, he suggested, could leave the US defenseless in a crisis, unable to produce the drones and advanced equipment required for national security.
Lutnick framed the issue around a fundamental question of self-reliance: if a nation cannot produce its own advanced semiconductors, how can it effectively defend itself? To address this, he confirmed a personal objective to dramatically increase the domestic share of US chip production from a mere two percent to forty percent. Achieving this ambitious goal would involve transplanting Taiwan’s entire semiconductor supply chain, a complex ecosystem of design, fabrication, and materials, to the United States. Industry experts, however, caution that such a monumental industrial shift would likely span multiple presidential terms, far exceeding a single administration’s timeline.
Echoing this sentiment, Nvidia CEO Jensen Huang previously projected that the US is still one to two decades away from achieving any meaningful level of supply chain independence for semiconductors. He characterized the goal of near-term self-sufficiency as an impractical objective given the immense technical and logistical challenges involved.
Lutnick conceded that convincing Taiwan to agree is a “herculean” undertaking that many consider impossible. A primary obstacle is persuading Taiwanese leadership that the arrangement is in their best interest. He acknowledged that it is “not natural for Taiwan” to contemplate surrendering its dominant position as the world’s leading chip supplier. This role not only brings immense economic benefits but also guarantees a degree of long-running international protection and diplomatic support from allied nations, which could be jeopardized by such a fundamental shift in its industrial policy.
(Source: Ars Technica)
