US Commerce Secretary Howard Lutnick says the US aims to get “maybe 50% market share” of chip and wafer production to offset Beijing's threats to invade Taiwan
Washington is demanding Taiwan move investment and chip production to the US so half of American demand is manufactured locally …
Context & Ripple Effects
Washington’s target extends a years-long effort to secure semiconductor supply chains with Taiwan, including an earlier push for manufacturer data to map supply risks. It turns that resilience agenda into an explicit production-share ambition.
The demand also sharpens the tension already identified in coverage of US efforts to reduce dependence on Taiwanese chips: supply-chain diversification can conflict with Taiwan’s interest in retaining its manufacturing base. Taiwan’s subsequent rejection of a 50-50 split underscores that this is a negotiating objective, not an agreed outcome.
First-order effects
- US-Taiwan negotiations now center more directly on where future chip and wafer investment and production capacity will be located.
- Taiwanese chip producers face added US pressure to align expansion plans with a goal of supplying roughly half of US demand from domestic production.
Second-order effects
- A more explicit US localization target raises the stakes for capacity allocation between US and Taiwan sites, potentially making investment commitments a central trade and security bargaining issue.
- Other chip-producing jurisdictions and suppliers may face stronger incentives to position themselves as alternative sources as Washington seeks to reduce concentrated dependence.
Third-order effects
- If pursued consistently, the policy would shift semiconductors further from an efficiency-led global supply chain toward geographically redundant, security-oriented production networks.
- The episode suggests that access to leading-edge manufacturing capacity will remain a tool of statecraft, though the extent of relocation depends on whether Taiwan accepts such terms and companies can execute expansions.
The trend: Semiconductor policy is evolving from supply-chain resilience planning into active bargaining over the geographic control of strategically important manufacturing.