Commerce Secretary Howard Lutnick told NewsNation on Sunday that Washington expects Taiwan to relocate half of its semiconductor manufacturing to American soil, marking an aggressive escalation in the Trump administration’s campaign to reshape global chip supply chains.
The proposal would require Taiwan to relinquish its position as the world’s dominant producer of advanced chips—a capability often described as the island’s “silicon shield” against Chinese threats. Lutnick contends that ample US production capacity is necessary to protect Taiwan, essentially redefining the shield as a shared strategic asset rather than Taiwan’s exclusive deterrent.
Liu Pei-chen, a researcher at Taiwan Institute of Economic Research, warned that the plan could force Taiwan Semiconductor Manufacturing to accelerate American expansion beyond its existing $165 billion commitment. The chipmaker already operates one Arizona facility and is building multiple additional fabs scheduled to produce cutting-edge processors by decade’s end.
The initiative faces substantial obstacles. Manufacturing costs, regulatory complexity, and workforce availability all favor Taiwan over the US. Recent increases in American work visa expenses compound these challenges.
Taiwan’s government must now balance satisfying Washington’s demands while preserving its technological edge and intellectual property rights. The country’s ability to maintain leadership in next-generation processes while supplying talent to overseas operations remains uncertain as negotiations continue.
