Taiwan and U.S. Agree to 15% Mutual Tariff Rate
Semiconductor Production in U.S. Projected to Reach 20% by 2036
The United States has announced its goal of relocating 40% of Taiwan's semiconductor production capacity to the U.S. following a mutual tariff agreement with Taiwan, but questions have been raised about the feasibility of this plan.
According to Central News Agency and other Chinese-language media on January 17 (local time), U.S. Secretary of Commerce Howard Lutnick stated in a CNBC interview after the agreement was reached, "Our goal is to bring 40% of Taiwan's entire (semiconductor) supply chain and production volume to the United States."
On January 15, the two sides agreed to lower the mutual tariff rate imposed by the United States on Taiwan to 15%, and for Taiwanese companies and the government to provide direct investments and credit guarantees in the United States totaling 250 billion dollars each.
Secretary Lutnick claimed that hundreds of Taiwan's semiconductor-related companies, including TSMC, would relocate to the United States, raising concerns that Taiwan's semiconductor industry could become hollowed out.
In this regard, Taiwan's Minister of Economic Affairs Kung Ming-hsin predicted the previous day that, based on advanced processes of 5nm (nanometer, one billionth of a meter) or less, the industrial capacity ratio between Taiwan and the United States would be 85% to 15% in 2030, and 80% to 20% in 2036.
He commented, "I don't know how Secretary Lutnick made his calculations," adding, "Taiwan remains a key hub for semiconductor production, while the United States is the most important country for artificial intelligence (AI) applications, so both sides can cooperate."
However, Wendell Huang, Chief Financial Officer (CFO) of TSMC, stated during a conference call on January 15 that about 30% of new advanced factories below the 2nm (N2) level would be built in the United States. TSMC Chairman Mark Liu also revealed during the conference call that the company had acquired additional land in Arizona for plant expansion, with the newly acquired area reportedly amounting to 3.65 square kilometers.
CFO Huang said in an interview with Bloomberg the previous day that while TSMC would strive to accelerate the transfer of advanced wafer manufacturing technology to the United States, Taiwan would still retain the most cutting-edge manufacturing technology.
He further explained that, for practical reasons, the most advanced technologies could only be transferred overseas after they have been used and stabilized in Taiwan. He anticipated that transferring the latest technology abroad and beginning mass production would take at least one year.
Taiwanese research firm Market Intelligence & Consulting commented, "TSMC's expansion of production capacity in the United States will proceed cautiously and in a restrained manner," adding, "The final decision will be made according to market conditions."
Bob O'Donnell, a U.S. semiconductor expert, stated, "There is no doubt that some progress has been made in shifting the supply chain, but it will require a very long time." He also noted that the Trump administration tends to exaggerate the feasibility of its policies. He continued, "Such processes take many years, and everyone knows they cannot be completed within the Trump administration. Realistically, it is impossible," adding, "While U.S. production capacity is increasing, it is impossible to replace Taiwan's core production capacity."
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