Moving 40% of Taiwan chip production to U.S. 'impossible': Vice premier

Taipei, Feb. 9 (CNA) Taiwan's trade negotiators told the United States that Taipei would not relocate 40 percent of its semiconductor production to the U.S., and that its most advanced technologies would remain in Taiwan, Vice Premier Cheng Li-chiun (鄭麗君) said Sunday.

"I told the U.S. side very clearly -- that's impossible," Cheng, who led the negotiation team, said in an interview that aired Sunday night on the CTS television channel.

Cheng was referring to remarks by U.S. Commerce Secretary Howard Lutnick in January, in which he said his goal was to bring 40 percent of Taiwan's chip supply chain to the U.S.

In the interview, Cheng said Taiwan's almost 90-percent market share in advanced semiconductor production was the result of an ecosystem developed over several decades, and could not be "moved" to the U.S.

"I told the U.S. side, we can't distribute production capacity, but we can expand our layout in the U.S.," Cheng said.

Cheng also defended the broad outline of the agreement with the U.S., under which Washington will lower tariffs on Taiwanese goods from 20 percent to 15 percent, placing Taiwan on an equal footing with competitors such as Japan, South Korea, and the European Union.

In return, Taiwanese semiconductor and tech companies will invest US$250 billion in the U.S. based on their own plans, while the Taiwanese government will provide US$250 billion in credit guarantees to facilitate the investments.

Cheng said the structure of the deal -- independent investment by companies combined with government financial guarantees -- was an example of the "Taiwan model," and differed from the investment pledges made by Japan and South Korea.

It also means that Taiwan and the U.S. will have to work together, using the Taiwan model, to build supply chains and meet their strategic goals, she said.

Cheng said Taiwan's science parks would not be relocated to the U.S., and that she had made clear during negotiations that Taiwan's most advanced semiconductor technology would not be transferred to other countries.

"It needs to be carried out in Taiwan, where there is a comprehensive ecosystem for continuous research and development," she said.

Taiwan's semiconductor firms "will only rationally expand their investments to other countries after they have set up factories in Taiwan and confirmed they can mass produce," Cheng said.

For that reason, the most advanced R&D and manufacturing processes must be "carried out first in Taiwan," she said.

Officials from the United States and Taiwan are expected to sign and release the full terms of the tariff agreement in the coming days or weeks.

The deal must then be sent to Taiwan's opposition-controlled Legislature for approval.