Taiwan would act with prudence in negotiations with the US, the Office of Trade Negotiations said yesterday, following comments by US Secretary of Commerce Howard Lutnick that 50 percent of US demand for Taiwan’s semiconductors be manufactured in the US to counter Beijing’s threats to invade Taiwan.
Lutnick made the comments in a NewsNation interview broadcast on Sunday.
The Executive Yuan’s trade office said only that it would “act with prudence,” without elaborating.
Photo: Reuters
Lutnick’s latest comments follow a statement he made earlier this month on CNBC that the White House has “a big deal coming with Taiwan.”
The Wall Street Journal on Saturday reported that Chinese President Xi Jinping (習近平) is pushing US President Donald Trump to oppose Taiwanese independence, using Trump’s eagerness for a trade deal as an opportunity to press Xi’s top goal.
On the same day, it also reported that the US is planning to push chipmakers to match the volume of semiconductors that their customers currently import from overseas providers through domestic production — a 1:1 domestic-to-import ratio — as an effort to move semiconductor manufacturing to the US.
In the NewsNation interview, Lutnick touched on the Wall Street Journal reports, suggesting that Taiwan move half of its chip production for US customers to the US in exchange for defense support.
“The Chinese have said: ‘We’re going to take Taiwan,’” Lutnick said. “Like, they’re not even shy about it.”
Due to Taiwan’s proximity to China, it cannot make “95 percent of our chips,” he said.
While Taiwan makes a majority of the most advanced semiconductors, tech Web site Tom’s Hardware cited a US International Trade Commission report as showing that Taiwan only made about 44 percent of logic chips and 24 percent of memory chips that enter the US market.
Moving that much of Taiwan’s semiconductor capacity to the US would erode the “silicon shield” that many believe makes Taiwan too critical to the global economy to be attacked, industry experts said.
That would put Taiwan’s negotiation team in a difficult position, they added.
“In the trade world, it’s called ‘silicon shield’ — like, we need their silicon, the chips so badly that we’ll shield them, we’ll protect them,” Lutnick told NewsNation.
However, “if you have 95 percent, how am I going to get it to protect you? Are you going to put it on a plane? Are you going to put it on a boat?” he added.
The Trump administration’s objective is to move a significant portion of semiconductor manufacturing to the US to ensure the US can meet its own defense needs, he said.
The goal is not natural for Taiwan, as “what’s natural for Taiwan is: ‘We produce 95 percent [of the world’s most advanced semiconductors], we feel great about it,’ and you know, Donald Trump would say: ‘It’s not healthy for you [Taiwan], or healthy for us [the US], because we protect you, and for us to protect you, come on, you need to help us achieve reasonable self-sufficiency.’”
“That’s been the conversation we had with Taiwan, that you have to understand it’s vital for you to have us produce 50 percent,” he said.
“We’re still fundamentally reliant upon you [Taiwan], because we can’t live without the other half,” Lutnick said.
He said that the US’ goal is to have a 40 percent market share of the chip industry and “maybe 50 percent market share of producing the chip and the wafers, you know, the semiconductors we need for American consumption.”
“That’s our objective, and I think it will shock everybody how successful we are,” he added.
That goal would require about US$500 billion in investments, he said.
Chinese Nationalist Party (KMT) Legislator Hsu Yu-chen (許宇甄) said Lutnick’s proposal is neither a “trade negotiation” nor cooperation, but “exploiting and plundering” Taiwan, forcing Taiwan to cut its economic lifeline.
The US is no longer satisfied with only selling arms to Taiwan, but is now trying to rob Taiwan of its semiconductor industry, which is not only an economic and trade issue, but a national security matter, she said.
Taiwan’s semiconductor industry is called a “silicon shield” because it is irreplaceable, letting the international community know it has a reason to maintain peace in the Taiwan Strait, Hsu said.
If Taiwan Semiconductor Manufacturing Co’s most advanced manufacturing process is forced to be used in the US, it would weaken that “silicon shield” and leave Taiwan with no guarantee of safety, she said, adding that the US is pushing Taiwan toward danger.
If the US really sees Taiwan as a democratic partner, it should respect Taiwan’s industrial development, instead of seeking to exploit Taiwan in the name of national security, Hsu said.
If President William Lai’s (賴清德) administration chooses to comply with Washington’s demands and conceal it from the public, it would be helping a foreign power destroy the nation’s last line of defense and the nation’s future, she said.
Any person who truly loves Taiwan would not accept such a “traitorous” deal, and facing such humiliation and danger, the legislature would not sit on its hands if it happens, she added.
Taiwan needs allies, but not with nations that only care about themselves and not about Taiwan’s survival, she said.
Additional reporting by Reuters and Bloomberg
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