Shifting 40 percent of Taiwan’s semiconductor supply chain to the US within the term of US President Donald Trump is “not physically possible,” an expert said on Friday.
The current momentum is showing a gradual shift toward more manufacturing in the US, but the logistics and complexity of the industry mean reaching such a goal could take years, if not decades, tech industry analyst Bob O’Donnell said.
“Most people don’t really understand how complicated the supply chains in semiconductors are, and so they make unrealistic estimates as to how quickly they can be moved and changed,” O’Donnell said.
Photo: Ritchie B. Tongo, EPA
He described Washington’s claims as “exaggerations” aimed at boosting firms’ confidence in the US government’s capability to sustain the long-term momentum of the ongoing shift of production to the US.
“A lot of times it’s about momentum. And so the momentum right now is toward more of this [semiconductor manufacturing] being done in the US. And that helps, because then other companies get encouraged,” O’Donnell said.
The Executive Yuan on Friday said the US has agreed to lower tariffs on Taiwanese goods from 20 percent to 15 percent, without stacking them on existing most-favored-nation rates.
The deal includes a pledge that Taiwanese semiconductor and technology companies would invest at least US$250 billion in the US, and a US$250 billion credit guarantee from the government for other investments.
On the same day, US Secretary of Commerce Howard Lutnick said that 40 percent of Taiwan’s supply chain could be reshored to the US before Trump’s term ends in 2029.
Some people in Taiwan have expressed concern that heavy investment in the US could hollow out domestic production and weaken the nation’s globally important semiconductor industry, which they see as a key factor deterring a potential Chinese attack.
The Chinese Nationalist Party (KMT) said Taiwan has paid a heavy price just to achieve the same outcome as other countries, as the new 15 percent tariff matches levies set on goods from major US trade partners such as Japan and South Korea.
Washington’s aim to move 40 percent of the nation’s semiconductor supply chain and production to the US could effectively hollow out the country, the KMT added.
The Taiwan People’s Party said the government’s pledge to provide up to US$250 billion in credit guarantees to support investments in the US amounts to “using taxpayers’ money to subsidize US industrial policy.”
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