Taiwan rejects US proposal for “50-50” split in chip production

Taiwan has rejected Washington’s proposal that it manufacture only half of the semiconductors it currently supplies to the United States, the island’s top trade negotiator confirmed.

Speaking to reporters upon returning from trade talks in Washington, Cheng Li-chiun, who also serves as Taiwan’s vice premier, said on October 1 that the so-called “50-50” arrangement in chip production was never discussed during the negotiations, according to Taiwanese media.

She explained that the talks instead focused on reducing tariff rates, securing exemptions from tariff stacking — additional duties levied on exports — and lowering the current 20% reciprocal tariff Taiwan faces.

The idea of a production split had been raised days earlier by U.S. Commerce Secretary Howard Lutnick. In an interview with NewsNation, Lutnick stressed the need to reduce American dependence on Taiwan, noting that 95% of U.S. chip demand is currently supplied from the island.

“My objective, and this administration’s objective, is to get chip manufacturing significantly onshored — we need to make our own chips,” he said. “The idea that I pitched [to Taiwan] was, let’s get to 50-50. We’re producing half, and you’re producing half.”

The proposal has drawn sharp criticism in Taiwan. Eric Chu, chairman of the opposition Kuomintang party, denounced the plan as “an act of exploitation and plunder,” adding: “No one can sell out Taiwan or TSMC, and no one can undermine Taiwan’s silicon shield.” His reference was to Taiwan Semiconductor Manufacturing Company, the world’s leader in advanced chipmaking.

Taiwan’s dominance in the global semiconductor industry is often described as its “Silicon Shield” — a strategic advantage thought to deter direct military action from China. Beijing considers Taiwan part of its territory and has threatened to reclaim it by force, a claim Taipei firmly rejects.

Lutnick, however, dismissed the notion of a Silicon Shield in his remarks, arguing that Taiwan would be safer if semiconductor production were more evenly balanced between Washington and Taipei.

Taiwan People’s Party Chairman Huang Kuo-chang also condemned the proposal, characterising it as an effort to “hollow out the foundations of Taiwan’s technology sector,” media reported.

Earlier this year, U.S. President Donald Trump also criticised Taiwan’s dominance in the semiconductor industry, accusing it of “stealing” America’s chip business.

By Tamilla Hasanova