![Popular Small-Size Actress Aunty Ajara Dies After Liver Illness [VIDEO]](https://thepunchng.com/wp-content/uploads/2026/02/20241109_125042-75x75.jpg)
Taiwan pledges continued AI chip dominance as Washington pushes reshoring of semiconductor production
Taiwan has vowed to remain the world’s “most important” producer of artificial intelligence (AI) chips after reaching a landmark trade agreement with the United States that will lower tariffs on Taiwanese exports and unlock hundreds of billions of dollars in new investment in American semiconductor manufacturing.
The deal, announced on Friday, reflects Washington’s push to reduce reliance on foreign chipmakers while strengthening domestic production of semiconductors — a critical pillar of the global economy.
“This agreement will drive a massive reshoring of America’s semiconductor sector,” the US Commerce Department said in a statement.
Tariffs Reduced, Investment Expanded
Under the agreement, the United States will reduce tariffs on Taiwanese goods to 15 per cent, down from the previous 20 per cent “reciprocal” rate imposed to address trade imbalances and what Washington considers unfair practices.
Taiwanese Premier Cho Jung-tai praised the negotiating team, describing the outcome as “a well-executed home run” after months of talks.
“These results underscore that the progress achieved so far has been hard-won,” Cho said.
Sector-specific tariffs on auto parts, timber, lumber and wood products will also be capped at 15 per cent. Meanwhile, generic pharmaceuticals and certain natural resources will face no reciprocal duties, according to the US Commerce Department.
Taiwan’s government confirmed that the new tariffs will not be stacked on existing duties, easing concerns among local manufacturers.
Chip Dominance and Global Security Concerns
Taiwan’s central role in semiconductor production has long been viewed as a “silicon shield” — a strategic deterrent against potential aggression from China, which claims the island as part of its sovereign territory. The dominance has also been a key incentive for US military and political support.
However, rising tensions with Beijing have heightened fears of supply-chain disruptions, prompting the United States and its allies to push for more diversified chip production.
Despite this shift, Taiwan insists its leadership will remain intact.
“Based on current planning, Taiwan will still remain the world’s most important producer of AI semiconductors — not only for Taiwanese companies, but globally,” Economic Affairs Minister Kung Ming-hsin told reporters.
He projected that advanced AI chip production capacity would be split 85-15 between Taiwan and the US by 2030, and 80-20 by 2036.
Political Pushback at Home and Abroad
China’s foreign ministry said it “resolutely opposes” the deal.
Domestically, the agreement must still pass Taiwan’s opposition-controlled parliament, where concerns have emerged over the potential erosion of the island’s chip dominance.
Cheng Li-wun, chairperson of the Kuomintang party, which supports closer ties with Beijing, warned that expanding Taiwanese investment in the US could “hollow out” Taiwan’s economy.
$250 Billion Investment Pledge
Under the agreement, Taiwanese chip and technology firms are expected to make direct investments of at least $250 billion in the United States, targeting advanced semiconductor manufacturing, AI infrastructure, and capacity expansion.
Taiwan will also provide credit guarantees worth at least $250 billion to support further overseas investment, strengthening the US semiconductor supply chain.
US Commerce Secretary Howard Lutnick said the goal is to relocate a significant portion of Taiwan’s production ecosystem.
“The objective is to bring 40 per cent of Taiwan’s entire supply chain and production into America,” Lutnick told CNBC.
“We’re going to bring it all over, so we become self-sufficient in building semiconductors.”
Implications for TSMC and the Industry
Although the announcement did not name specific companies, the deal has major implications for Taiwan Semiconductor Manufacturing Company (TSMC) — the world’s largest contract chipmaker — which last year pledged an additional $100 billion for US plants.
Driven by surging demand for AI technology, TSMC’s chips power everything from Apple devices to Nvidia’s cutting-edge AI hardware.
“As a semiconductor foundry serving customers worldwide, we welcome the prospect of robust trade agreements between the United States and Taiwan,” TSMC said in a statement.
“Strengthened trade relations are essential for advancing future technologies and ensuring a resilient semiconductor supply chain.”
Lutnick revealed that TSMC has acquired hundreds of acres of land adjacent to its existing site in Arizona, signaling potential further expansion.
Industry Reaction
While welcoming the tariff reduction, some Taiwanese exporters remain cautious.
“Of course, it’s good that the reciprocal tariff has been lowered to 15 per cent — at least it puts us on par with our main competitors, South Korea and Japan,” said Chris Wu, sales director at Litz Hitech Corp.
However, he noted that with single-digit profit margins, “there is no way we can absorb the tariff” for US customers.
More than half of Taiwan’s exports to the United States consist of information and communications technology products, including semiconductors.
What Comes Next
The US Commerce Department said Taiwanese producers investing in America would receive more favourable treatment in future semiconductor-related duties.
A day before the announcement, US officials delayed broader chip tariffs but imposed a 25 per cent duty on certain semiconductors shipped abroad, a move seen as enabling US chipmaker Nvidia to continue selling AI chips to China.
AFP
