Taiwan has rejected a U.S. proposal that would require the island to manufacture only half of the chips it currently supplies to the American market, Vice Premier and top trade negotiator Cheng Li-chiun said on Wednesday.
Cheng, who returned from trade talks in Washington, told reporters that the so-called “50-50” plan was not part of the discussions. Instead, talks focused on tariff reductions, exemptions from tariff stacking, and lowering duties on Taiwanese exports. The island currently faces a 20% reciprocal tariff rate, she said, according to Taiwan’s Central News Agency.
U.S. Commerce Secretary Howard Lutnick revealed last weekend that Washington had raised the idea of dividing semiconductor output between the two economies. He said the United States relies on Taiwan for about 95% of its chip supply.
“My objective, and this administration’s objective, is to get chip manufacturing significantly onshored — we need to make our own chips,” Lutnick told NewsNation. “The idea that I pitched [Taiwan] was, let’s get to 50-50. We’re producing half, and you’re producing half.”
President Donald Trump has also criticized Taiwan’s dominance in semiconductor production this year, accusing the island of “stealing” the U.S. chip industry.
Taiwan’s political leaders swiftly pushed back. Eric Chu, chairman of the opposition Kuomintang, condemned Lutnick’s proposal as “an act of exploitation and plunder.” He stressed that “no one can sell out Taiwan or TSMC, and no one can undermine Taiwan’s silicon shield,” a reference to Taiwan Semiconductor Manufacturing Company, the global leader in advanced chipmaking.
The so-called “silicon shield” theory suggests that Taiwan’s strategic importance in chip production protects it from direct military aggression by China, which claims the island as its own. Lutnick dismissed that view, arguing that a more balanced chip supply between Washington and Taipei would improve Taiwan’s security.
Huang Kuo-chang, chairman of the Taiwan People’s Party, also criticized the U.S. proposal, warning that it would “hollow out the foundations of Taiwan’s technology sector.”
Neither the U.S. Trade Representative’s office nor Taiwan’s Ministry of Economic Affairs has responded to requests for comment.
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