INTERVIEW / Washington's 40% Taiwan chip reshoring claim unrealistic: Expert

San Francisco, Jan. 16 (CNA) Washington's goal of shifting 40 percent of Taiwan's semiconductor supply chain to the United States within President Donald Trump's term is "not physically possible," a U.S. expert said on Friday.

In an interview with CNA, tech industry analyst Bob O'Donnell said the current momentum shows a gradual shift toward more manufacturing in the U.S., but the logistics and complexity of the industry mean such a goal could take years, if not decades, to achieve.

"Most people don't really understand how complicated the supply chains in semiconductors are, and so they make unrealistic estimates as to how quickly they can be moved and changed," said O'Donnell, who is the founder of TECHnalysis Research in California.

O'Donnell described Washington's claims as "exaggerations" from the Trump administration, aimed at boosting firms' confidence in the government to sustain the long-term momentum of the ongoing shift of production to the U.S.

"A lot of times it's about momentum. And so the momentum right now is towards more of this [semiconductor manufacturing] being done in the U.S. And that helps, because then other companies get encouraged," he said.

Taiwan's Executive Yuan said on Friday the U.S. has agreed to lower tariffs on Taiwanese goods from 20 percent to 15 percent, without stacking them on existing most-favored-nation (MFN) rates, following the latest round of trade negotiations in Washington.

The deal includes a pledge for Taiwanese semiconductor and technology companies to invest at least US$250 billion directly in the U.S., while Taiwan’s government will provide up to US$250 billion in credit guarantees for other investments.

It is not immediately clear whether the US$250 billion investment commitment includes the US$165 billion that Taiwan Semiconductor Manufacturing Co., the world's largest contract chipmaker, has already pledged to invest in the U.S.

On the same day, U.S. Secretary of Commerce Howard Lutnick said in an interview with CNBC that 40 percent of Taiwan's supply chain could be reshored to the U.S. before Trump's term ends in 2029.

Opposition figures and critics in Taiwan have expressed concern that heavy Taiwanese investment in the U.S. could hollow out domestic production and weaken Taiwan’s globally important semiconductor industry, which they see as a key factor deterring a potential Chinese attack.