Taipei: Taiwan's trade negotiators have informed the United States that relocating 40 percent of its semiconductor production to the U.S. is not feasible, and that Taiwan's most advanced technologies will remain within the island, Vice Premier Cheng Li-chiun stated on Sunday. "I told the U.S. side very clearly -- that's impossible," Cheng, who led the negotiation team, declared in an interview aired on the CTS television channel.

According to Focus Taiwan, Cheng was responding to comments made by U.S. Commerce Secretary Howard Lutnick in January, where he expressed a goal of transferring 40 percent of Taiwan's chip supply chain to the U.S. Cheng emphasized that Taiwan's substantial market share in advanced semiconductor production, accounting for almost 90 percent, is due to an ecosystem developed over several decades and cannot be simply relocated to the U.S.

Cheng explained that while Taiwan cannot distribute production capacity, it is open to expanding its presence in the U.S. Additionally, she defended the new agreement with the United States, under which Washington will reduce tariffs on Taiwanese goods from 20 percent to 15 percent, aligning Taiwan with competitors like Japan, South Korea, and the European Union.

In exchange, Taiwanese semiconductor and tech companies plan to invest US$250 billion in the U.S. as per their own strategies, while the Taiwanese government will offer US$250 billion in credit guarantees to support these investments. Cheng highlighted that this arrangement, characterized by independent company investments backed by government financial guarantees, exemplifies the "Taiwan model" and is distinct from investment commitments made by Japan and South Korea.

The agreement indicates that Taiwan and the U.S. will collaborate using the Taiwan model to develop supply chains and achieve strategic objectives. Cheng reiterated that Taiwan's science parks would not be relocated to the U.S., and made clear during negotiations that the most advanced semiconductor technology must remain within Taiwan due to its comprehensive ecosystem for ongoing research and development.

Taiwan's semiconductor firms will only consider expanding their investments abroad after establishing factories in Taiwan and confirming the viability of mass production. Consequently, the most advanced research and development, along with manufacturing processes, must initially occur in Taiwan.

Officials from both the United States and Taiwan are expected to finalize and announce the complete terms of the tariff agreement in the near future. Following this, the agreement will be submitted to Taiwan's opposition-controlled Legislature for approval.