Fri, Feb 21, 2025 page3

• Trump’s ‘stolen’ chip business claim incorrect: adviser

  MISUNDERSTANDING: The nation’s semiconductor technology was developed with US assistance, but it surpassed competitors through its own innovations

  • Staff writer, with CNA
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  A senior adviser to the president said that US President Donald Trump’s claim that Taiwan “stole” the US’ chip business is a misunderstanding, stressing that Taiwan’s semiconductor success has been a crucial element in helping the US maintain its technological edge.

  During his presidential campaign, Trump said that Taiwan “stole our chip business.”

  After returning to the White House, he signed a presidential memorandum on Thursday last week to pave the way for tariffs on foreign chip exports, citing that more than 90 percent of advanced chips are produced in Taiwan.

  

  Senior presidential adviser Chen Po-chih is pictured during an interview in Taipei on Monday.

  Photo: CNA

  “Taiwan took our chip business away,” Trump said after the signing. “We want that business back.”

  Chen Po-chih (陳博志), senior adviser to President William Lai (賴清德) and a former head of the Council for Economic Planning and Development (now the National Development Council), told the Central News Agency in an exclusive interview on Monday that Trump’s claim that Taiwan stole the US chip business is incorrect and a misunderstanding.

  Taiwan’s semiconductor technology was initially developed with US assistance, with the earliest technology coming from the US, and Taiwan’s first generation of semiconductor talent trained through US-organized programs, he said.

  Such historical context demonstrates that the US has long supported Taiwan’s semiconductor development and initially helped it counter other countries in the sector, Chen said, adding that Taiwan later surpassed global competitors through its own research and innovation.

  He added that the US relies on Taiwan for contract manufacturing, as it enables US companies to focus on the research and design of software, hardware and advanced chips, with that model of cooperation contributing to the rise of world-leading tech giants in the US.

  “Without the cooperation of Taiwan and Taiwan Semiconductor Manufacturing Co [TSMC], the US might not have been able to outcompete strategically ambitious countries like China, Japan and South Korea,” he said.

  One example is how the US regained its economic leadership after the 1970s, when Japan dominated the production of many new products, from color televisions to videocassette recorders and video cameras, Chen said.

  He cited how the US did not reclaim its technological lead until the emergence of personal computers (PC), with Taiwan playing a crucial role in the recovery by providing contract manufacturing of PCs that enabled US companies to rapidly develop and dominate the market at low costs.

  “The US has won, thanks to Taiwan,” Chen said.

  He added that each industry has different optimal conditions for its development and Taiwan has the best conditions and foundation for contract manufacturing in the semiconductor sector, with China, South Korea and Singapore having tried to surpass Taiwan in the sector, but failed to do so.

  Even if TSMC moved entirely to the US, it would not be as competitive as it is in Taiwan, Chen said, adding that such a move would weaken the ability of the world’s largest contract chipmaker to support the US tech industry and thus create more opportunities for China.

  He also raised Taiwan’s contract chip manufacturing, and its information and communications technology industries as key examples, citing how they are helping the US maintain its leadership in the artificial intelligence sector.

  The honorary chairman of Taiwan Thinktank also said that if the US suppresses Taiwan’s semiconductor sector, some Taiwanese talent could be absorbed by China, ultimately harming US interests.

  While Taiwan understands the US’ concerns about national security and supply chain risks, and demanding the expansion of semiconductor production by Taiwanese companies in the US, discussions between the two sides should focus on cooperation, rather than on the US imposing high tariffs on chips produced in Taiwan, he said.

  If the US imposes high tariffs on Taiwanese chips, “should Taiwanese companies raise their chip prices?” Chen said, adding that even if those companies do not raise prices, it is questionable whether they would still prioritize demand from US companies, which are deeply concerned about the issue.

  The key to semiconductor collaboration is a “horizontal division of labor,” where the US, Taiwan and other democratic countries coordinate their strengths and continue to specialize, Chen said, adding that such an approach would be in the US’ best interest.

  Trump also announced plans to hit exports from countries that he said have trade policies that are unfair to the US, saying: “Whatever countries charge the United States of America, we will charge them. No more, no less.”

  Trump’s plan to impose reciprocal tariffs is not necessarily the “most appropriate” tariff, and the policy appears crude, possibly stemming from its primary purpose of intimidation, Chen said.

  Trump’s concept of “reciprocal tariffs” can be simplified as: “If you tax me, I will tax you the same amount,” Chen added.

  In international trade, a country rarely exports large quantities of a good that it imports in large quantities, meaning that imposing reciprocal tariffs on products could be ineffective, Chen said.

  However, the US — the world’s leading economic power — due to its size is able to implement tariffs that maximize benefits to itself while exerting pressure on other nations, making Trump’s reciprocal tariff policy appear to be an act of “intimidation,” he said.

  It remains unclear whether Trump’s approach would apply uniformly to all products or be tailored to individual countries, Chen added.

  Either way, the approach contravenes the WTO principle of most-favored-nation status, Chen said.

  Most-favored-nation is based on the principle that WTO members treat each other equally and “trade without discrimination,” the WTO Web site says.

  “Under the WTO agreements, countries cannot normally discriminate between their trading partners,” it says.
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