Taiwan Semiconductor Negotiations have entered a critical phase following U.S. Secretary of Commerce Howard Lutnick’s remarks. He suggested that half of U.S. demand for Taiwanese chips be produced domestically to counter China’s security threats. Taiwan’s Office of Trade Negotiations responded yesterday, stating it will act with prudence in discussions with the U.S.
Lutnick made the comments during a NewsNation interview on Sunday. He highlighted that China has openly threatened to take Taiwan and emphasized Taiwan’s critical role in global chip supply. Taiwan produces a majority of advanced semiconductors, but Lutnick noted the U.S. remains dependent on foreign sources for certain logic and memory chips.
The Executive Yuan’s trade office did not elaborate on specific responses, only promising cautious handling of the negotiations. This follows Lutnick’s earlier statement on CNBC about a “big deal” with Taiwan in the coming months.
Reports indicate President Xi Jinping is pressing U.S. President Donald Trump to oppose Taiwanese independence, using trade talks to push strategic goals. Meanwhile, the U.S. plans to increase domestic semiconductor production to match imports, aiming for a one-to-one ratio. Lutnick proposed that Taiwan relocate 50 percent of its chip output to U.S. soil in exchange for defense support.
Industry experts warn that moving such a large portion of Taiwan’s production could weaken the so-called “silicon shield,” which currently deters attacks due to Taiwan’s indispensable chip supply. Lutnick described the shield as vital but logistically challenging if most production is relocated.
Chinese Nationalist Party Legislator Hsu Yu-chen criticized the proposal, calling it exploitation that threatens Taiwan’s economic lifeline and national security. She emphasized that Taiwan’s semiconductor industry ensures global recognition of its strategic importance and safeguards peace in the Taiwan Strait. Hsu added that forcing advanced manufacturing abroad risks undermining Taiwan’s security and future.
Looking ahead, Taiwan faces a delicate balancing act between maintaining strong relations with the U.S. and preserving national security. Negotiators must weigh economic benefits against the potential erosion of the silicon shield. Analysts expect that public scrutiny and legislative oversight will influence Taiwan’s decision-making in the coming months.
Taiwan Semiconductor Negotiations highlight the intersection of trade, defense, and international diplomacy. How Taiwan responds could shape both regional stability and global semiconductor supply chains for years to come.
