Taiwan is drawing a hard line on U.S. demands to move leading-edge chipmaking stateside, even as Taiwan Semiconductor Manufacturing Company Ltd. (NYSE:TSM) pours billions into Arizona and expands abroad for practical growth reasons.
The 40% Target Deemed “Impossible”
Taiwan’s top tariff negotiator pushed back against U.S. calls to shift a large share of chip production stateside, saying Taiwan cannot relocate 40% of its semiconductor capacity to America.
Leading Taiwanese contract chipmaker Taiwan Semiconductor is already investing $165 billion to build fabs in Arizona.
In an interview broadcast Sunday on CTS, Vice Premier Cheng Li-chiun said she told Washington that Taiwan’s semiconductor ecosystem—built over decades—cannot be moved, Reuters reported on Monday.
“I have made it very clear to the United States that this is impossible,” she said, referring to the 40% target floated by U.S. officials.
Cheng stressed that Taiwan’s chip industry will keep expanding at home, even as companies grow their overseas footprint.
“Our overall capacity (in Taiwan) will only continue to grow,” she said. “But we can expand our presence in the United States.”
Her comments followed remarks from U.S. Commerce Secretary Howard Lutnick, who argued the U.S. must bring semiconductor manufacturing back because it is too concentrated near China.
Tariff Deal, Arizona Spending, And Taiwan’s Red Line
Taiwan and the U.S. agreed last month to cut tariffs on Taiwanese exports to 15% from 20%.
Cheng said Taiwan will not relocate its science parks but is willing to share its experience in building a semiconductor cluster to help the U.S. develop its own.
She also said Taiwan’s total chip capacity—including projects under construction and planned across advanced manufacturing and packaging—will remain far larger than what it invests in the U.S. or elsewhere.
Analysts See Limited Advanced Chip Migration To The U.S.
Economist Lien Hsien-ming had echoed similar sentiments recently.
He said Taiwan Semiconductor will likely move only a small portion of its most advanced chipmaking to the U.S. because Arizona construction timelines won’t allow a major shift before President Donald Trump’s second term ends.
Lien estimated that less than 15% of Taiwan Semiconductor’s cutting-edge processes will relocate stateside, pushing back on U.S. Commerce Secretary Howard Lutnick’s goal of moving 40% of Taiwan’s supply chain to America by 2029.
He pointed to the slow ramp of Taiwan Semiconductor’s Arizona buildout, where the company is investing $65 billion in three fabs, with the second facility not expected to reach mass production until 2027 and the third still under construction.
Lien added that even with plans for a potential fourth fab, large-scale advanced output is unlikely to come online before Trump leaves office.
Taiwan Semiconductor is diversifying its global footprint mainly because Taiwan simply doesn’t have enough land to support unlimited large-scale industrial expansion, according to Taiwan Institute of Economic Research President Chang Chien-yi.
Chang said space constraints at home — not tariffs — are pushing companies like Taiwan Semiconductor to increase foreign investment, since they can’t keep adding advanced fabs in crowded areas such as Taipei’s Xinyi District.
He added that overseas projects are also driven largely by customer demand rather than government pressure, even as a new U.S.-Taiwan trade pact has heightened scrutiny over where Taiwan Semiconductor’s most advanced chips will be made.
Economists still expect most cutting-edge production to remain in Taiwan, with only a limited share shifting to the U.S. in the near term because Arizona facilities will take years to ramp up fully.
TSM Price Action: Taiwan Semiconductor shares were down 0.24% at $348.00 during premarket trading on Monday. The stock is trading near its 52-week high of $351.33, according to Benzinga Pro data.
Photo by FOTOGRIN via Shutterstock
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