US Commerce Secretary Howard Lutnick told a televised interview that he pitched a proposal for a 50/50 split in chip production between the US and Taiwan as part of US-Taiwan trade talks. Lutnick framed the idea as a national security measure, saying the US needs domestic capacity for critical chips.
00:00The United States may require half of all chips made by Taiwanese companies to be produced in the U.S. as part of a broader trade deal.
00:08That's according to U.S. Commerce Secretary Howard Lunnick, who made comments in a televised interview over the weekend.
00:14And to find out what this means for Taiwan, let's head to our reporter Chris Gorin in our Taipei newsroom.
00:20Chris, what exactly is Luckney proposing here?
00:23More chips made in America, Ivan. That's really the bottom line here.
00:30Letnick really emphasized that this is a matter of national security for the United States and said repeatedly that Taiwan makes 95 percent of chips, which is not quite right.
00:40But Taiwan does make about 90 percent of the world's most advanced chips.
00:45And Letnick mentioned specific cases such as the chips that are used in U.S. military drones, for example.
00:51He says that it's a problem that so many of these inputs come from Taiwan, especially given, as he put it, China has not been shy about wanting to take Taiwan.
01:00Now, the U.S. and Taiwan are right now negotiating to lower the 20 percent tariff on most Taiwanese goods, as well as potential semiconductor tariffs.
01:10And Letnick says that he has made a proposal to Taiwan about chip production.
01:14And he says, quote, the idea that I pitched was that I pitched them was let's get to 50 50.
01:21We're producing half and you're producing half.
01:23We're still fundamentally reliant upon you because we can't live without the other half.
01:27But if we have half, we have the capacity to do what we need to do if we need to do it.
01:33And he goes on to say regarding Taiwan making most of the world's chips, quote, Donald Trump would say it's not healthy for you or healthy for us because we protect you.
01:41And for us to protect you, you need to help us achieve reasonable self-sufficiency.
01:47Now, he's referring to the so-called Silicon Shield in that second quote there, which is the idea that the international community has an interest in preventing a Chinese attack on Taiwan because it relies so heavily on Taiwan's chips.
02:02So, Chris, does this actually represent a new U.S. policy on trade or Taiwan's security?
02:08And would Taiwan accept such a deal?
02:11Well, we did reach out to the White House, which has so far not responded to our request for comment.
02:19We also reached out to Taiwan's Office of Trade Negotiations, which has also not yet responded.
02:25And today is a national holiday.
02:27But the proposal does seem to echo recent reporting that the U.S.
02:32is seeking a one-to-one domestic-to-import ratio for chips from foreign countries, including Taiwan.
02:39And that failure to reach that ratio could result in a 100 percent tariff.
02:44Now, I should also point out that Taiwan's largest chip maker, TSMC, has already made the largest direct investment in the U.S.,
02:51one hundred sixty-five billion U.S. dollars to build chip factories in Arizona.
02:57And the firm has previously said that its goal is to get 30 percent of its two nanometer production in the U.S.
03:05by the time all the facilities in Arizona are built.
03:08Now, that's pretty far from half of all chips.
03:10And to get to 50 percent would require an incredible amount of time and investment.
03:16Now, the reporting around this issue does say that the policy is not yet officially announced and that it could still change.
03:23And until we do hear from Washington what this policy is, we can't be quite sure how things will turn out.
03:30Yvonne?
03:32Thanks for that, Chris.
03:33That was Chris Gorin reporting from our Taipei newsroom.
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