US pressures Taiwan on chip production relocation
The United States is pressuring Taiwan to shift 50% of its semiconductor production to US soil or risk losing military protection. This demand accompanies proposals for tariffs to balance foreign chip reliance. The policies aim to bolster domestic manufacturing amid global tensions.
In September 2025, the US government intensified efforts to onshore semiconductor production by targeting Taiwan's dominant role in the industry. According to reports, US officials have demanded that Taiwan relocate at least 50% of its chip manufacturing capacity to the United States. Failure to comply could result in the withdrawal of US military protection against potential threats from China.
Taiwan Semiconductor Manufacturing Company (TSMC), the world's largest contract chipmaker, has already committed to expanding in the US, including factories in Arizona. However, the new pressure seeks to accelerate and expand this diversification. A US official stated, "Taiwan must diversify its production or face consequences," highlighting concerns over supply chain vulnerabilities exposed by recent geopolitical strains.
Parallel to this, former President Donald Trump has proposed imposing tariffs on imported chips to achieve a "one-to-one balance" with domestic production. Under this plan, for every chip imported, an equivalent must be manufactured in the US. Trump remarked, "We'll impose tariffs until we achieve balance," aiming to reduce reliance on foreign suppliers, particularly from Taiwan and China. These tariffs could reach up to 100% on certain imports, potentially reshaping global trade dynamics.
The dual approach reflects broader US strategy to secure critical technology amid rising tensions in the Taiwan Strait. Taiwan produces over 90% of the world's advanced semiconductors, making it a focal point for economic and national security policies. While TSMC's US investments are underway, the 50% relocation target represents a significant escalation. No immediate response from Taiwanese officials has been detailed, but the demands underscore the intricate balance between alliance commitments and economic sovereignty.
These developments could impact global tech supply chains, affecting companies reliant on Taiwanese chips. The policies prioritize factual steps toward self-sufficiency without specifying timelines beyond the ongoing pressure.