Taiwan Semiconductor Manufacturing Company, Limited at Hsinchu Science Park.Annabelle Chih | Getty Images News | Getty ImagesTaiwan will not accept Washington's posal to locally manufacture half the chips it currently supplies to the U.S., the island's top trade negotiator said.Speaking to reporters, Cheng Li-chiun, also the country's vice premier, said on Wednesday that the posal for a "50-50" split in semiconductor duction was not even discussed, as she returned from trade talks in the U.S., according to Taiwan's Central News Agency.Cheng said the talks were focused on lowering tariff rates, securing exemptions from tariff stacking — additional duties — and reducing levies on Taiwanese exports.
Taiwan currently faces a "recical" tariff rate of 20%.Washington has held discussions with Taipei the "50-50" split in semiconductor duction, which would cut American reliance on Taiwan, Commerce Secretary Howard Lutnick said last weekend in an interview to NewsNation, adding that currently 95% of the U.S.
demand was met via chips duced within Taiwan. "My objective, and this administration's objective, is to get chip manufacturing significantly onshored — we need to make our own chips," Lutnick said.
"The idea that I pitched [Taiwan] was, let's get to 50-50. We're ducing half, and you're ducing half." U.S.
President Donald Trump had also taken aim at the island's dominance in chips earlier this year, accusing it of "stealing" the U.S.' chip .The Office of the U.S.
Trade Representative and Taiwan's Ministry of Economic Affairs did not immediately respond to CNBC's request for s.Lutnick's posal has been condemned by Taiwan's politicians, with Eric Chu, chairman of the island's principal opposition party Kuomintang, calling it "an act of exploitation and plunder," according to the Central News Agency report."No one can sell out Taiwan or TSMC, and no one can undermine Taiwan's silicon shield," Chu said, referring to Taiwan Semiconductor Manufacturing Company, the world's leader in advanced chip manufacturing.Taiwan's critical position in global chips duction is believed to have assured the island nation's defense against direct military action from China, often referred to as the "Silicon Shield" theory.In his NewsNation interview, Lutnick downplayed the "Silicon Shield," arguing that Taiwan would be safer with more balanced chip duction between Washington and Taipei.
Beijing views the democratically governed island of Taiwan as its own territory and has vowed to reclaim it by force if necessary, while Taipei rejects those claims.
Taiwan People's Party Chairman Huang Kuo-chang reportedly called Lutnick's posal an attempt to "hollow out the foundations of Taiwan's nology sector."