Instead of threatening tariffs on Taiwan-made chips, the US should try to reinforce cooperation with Taiwan on semiconductor development to take on challenges from the People’s Republic of China (PRC), a Taiwanese think tank said.
The administration of US President Donald Trump has threatened to impose across-the-board import duties of 32 percent on Taiwan-made goods and levy a separate tariff on semiconductors, which Taiwan is hoping to avoid.
The Research Institute for Democracy, Society, and Emerging Technology (DSET), a National Science and Technology Council think tank, said that US efforts should focus on containing China’s semiconductor rise rather than impairing Taiwan.
Photo: EPA-EFE
“Without any measures to take on the challenges from China, the global industrial sector will grow more dependent on Chinese suppliers, which could pose tremendous challenges to the global democratic alliance,” DSET chief executive officer Jeremy Chang (張智程) said on Monday.
Citing a suggestion from the DSET’s Let a Hundred Flowers Blossom report released on Wednesday, Chang said that cooperation between Taiwan and the US should be strengthened.
“Managed capacity planning and joint R&D [research and development] between non-Chinese firms, in combination with restrictions on Chinese imports and promotion policies targeting specialized processes, will be critical for the US and its allies to withstand the China semiconductor challenge,” the report said.
Non-resident DSET fellow Ho Ming-yen (何明彥) said that the way democracies impose precise semiconductor export controls on China — particularly on raw materials used in mature chip production — would be crucial in determining their ability to curb Beijing’s expansion in the sector.
Ho suggested that the US, Europe and East Asian countries such as Taiwan and South Korea reach a sectoral agreement to establish tariffs and outbound investment restrictions, create a free trade mechanism across the supply chain, and coordinate on capacity and specialized process development.
The DSET also warned that China has been aggressively expanding its presence in the global semiconductor market through government subsidies, state-directed investment and long-term strategic planning.
“Analysts project that PRC-based firms may account for nearly half of the world’s new mature-node manufacturing capacity within the next decade,” it said in a research report released in May titled The Great Siege: The PRC’s Comprehensive Strategy to Dominate Foundational Chips.
“This trajectory presents a growing risk to the United States, Taiwan and allied nations that rely on stable, diversified and market-oriented supply chains,” the report said.
China’s presence in the high-end tech arena has become more apparent and allows it to play a key role in the supply chains of the defense industry, Chang said.
Citing data compiled by TrendForce used in the Great Siege report, Chang said China accounted for 34 percent of the global mature chip market in 2023, lower than 43 percent commanded by Taiwan, but much higher than the 5 percent held by the US.
By 2027, China’s market share is projected to rise to 47 percent, while Taiwan’s share is expected to decrease to 36 percent, meaning Beijing would overtake Taipei as the world’s largest producer of mature chips. Meanwhile, Washington’s market share is forecast to drop to just 4 percent, it said.
Yet rather than focusing on strengthening ties with Taiwan for semiconductor development, the US is threatening a tariff on Taiwan-made chips by launching an investigation under Section 232 of the Trade Expansion Act of 1962.
“The Section 232-related investigation could worsen the situation, as this measure is unlikely to curb China’s expansion in the semiconductor industry,” Chang said.
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