Taiwan has officially rejected a proposal from the United States regarding semiconductor production. The proposal aimed for a 50-50 split in chip manufacturing between the two nations. Taiwan’s vice premier and top trade negotiator, Cheng Li-chiun, confirmed that the idea was not discussed during her recent trade talks in the U.S.
Taiwan’s Focus on Tariff Discussions
During her discussions, Cheng emphasized the primary agenda was to lower tariff rates. Taiwan is currently coping with a reciprocal tariff rate of 20%, which significantly impacts its economy. The discussions also revolved around securing exemptions from additional tariffs and reducing levies on Taiwanese exports.
U.S. Reliance on Taiwanese Chips
The U.S. heavily depends on Taiwanese chip production, fulfilling 95% of its demand. U.S. Commerce Secretary Howard Lutnick highlighted this reliance in an interview, expressing a desire to reduce it. He introduced the idea of a balanced approach to chip production, aiming for the proposed 50-50 manufacturing division.
- Current U.S. demand for chips met by Taiwan: 95%
- Proposed reciprocal tariff rate on Taiwan: 20%
Political Reactions in Taiwan
The proposal has drawn significant criticism from Taiwanese political figures. Eric Chu, chairman of the Kuomintang party, labeled it as “exploitation and plunder.” He stressed that Taiwan and its leading semiconductor manufacturer, Taiwan Semiconductor Manufacturing Company (TSMC), are non-negotiable in terms of national integrity and technology.
This sentiment echoes concerns about Taiwan’s strategic position in global chip production. The theory of the “Silicon Shield” suggests that Taiwan’s control over this vital industry helps protect it from potential military threats posed by China.
Concerns Over National Security
Lutnick, however, has questioned the effectiveness of the “Silicon Shield.” He suggested that distributing chip production more evenly between the U.S. and Taiwan could enhance Taiwan’s security. This ongoing tension is amplified by Beijing’s insistence that it claims Taiwan as its territory, with threats of reclaiming the island by force.
Conclusion
The dialogues between Taiwan and the U.S. are crucial, with significant implications on international trade and security. Taiwan’s refusal to accept the “50-50” chip proposal reflects its commitment to maintaining its sovereignty and technological prowess.
