Taipei draws a clear red line: Washington's plan to relocate 40% of Taiwanese chip production to the US is simply "impossible."
- Despite new billion-dollar deals, Taiwan guards its technological supremacy as geopolitical life insurance.
What the US Demands
Commerce Secretary Howard Lutnick laid out the 40% target in January – as part of the latest trade agreement with Taiwan.
❝"You can't have all of semiconductor manufacturing 80 miles from China."
Commerce Secretary Howard Lutnick
If Taiwan doesn't cooperate, Lutnick threatens tariffs of 100%.
What Taiwan Offers
TSMC is already investing $165 billion in Arizona factories. But Taipei draws a red line: The most advanced manufacturing stays in Taiwan.
- The so-called "N-2 rule" stipulates that overseas factories may only use technologies at least two generations behind the latest standard.
The "Silicon Shield" 🛡️
Taiwan produces around 90% of all cutting-edge chips (<3 nm). This dominance serves as a strategic shield: The more indispensable Taiwan is to the global tech industry, the greater US interest in its security.
A massive chip exodus would undermine this protection.
⚠️ Reality Check
Semiconductor analysts consider US goals illusory.
- Production costs in the US are 30–50% higher
- acute skilled labor shortage
- and sheer logistical complexity.
A shift of this magnitude is physically barely feasible by the end of Trump's term in 2028.
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