Commerce Secretary Howard Lutnick is pushing Taiwan to restructure global semiconductor production, proposing a 50-50 split that would see America manufacture half its own chips domestically. The plan would require over $500 billion in U.S. investments and fundamentally reshape the industry that Taiwan currently dominates with over 90% of advanced chip production.
The Trump administration just dropped a bombshell on the global chip industry. Commerce Secretary Howard Lutnick wants Taiwan to fundamentally restructure semiconductor production, proposing an ambitious 50-50 split that would see America manufacturing half its own chips by the end of Trump's term.
"My objective, and this administration's objective, is to get chip manufacturing significantly onshored - we need to make our own chips," Lutnick told NewsNation over the weekend. "The idea that I pitched [Taiwan] was, let's get to 50-50. We're producing half, and you're producing half."
The proposal strikes at the heart of Taiwan's semiconductor dominance. The island currently produces over 90% of the world's advanced semiconductors, with Taiwan Semiconductor Manufacturing Co. (TSMC) serving as the exclusive manufacturer for tech giants like Nvidia and Apple.
Lutnick's timeline is aggressive - reaching 40% domestic production by 2028 would require "northwards of $500 billion in local investments," he said. That's more than triple TSMC's planned $165 billion U.S. investment, which the company announced in March after years of expansion.
But this isn't just about economics. Lutnick directly challenged Taiwan's long-held "Silicon Shield" theory - the idea that the island's chip dominance protects it from Chinese invasion by making it too valuable to attack.
"My argument to them was, well, if you have 95% [chip production], how am I going to get it to protect you? You're going to put it on a plane? You're going to put it on a boat?" Lutnick said, highlighting the logistical vulnerability of Taiwan's concentrated production.
The comments align with Trump's broader Taiwan strategy. Last year, Trump accused Taiwan of "stealing" America's chip business and suggested the island should pay for U.S. defense commitments. His administration recently proposed 100% tariffs on semiconductors, with exemptions for companies investing domestically.
The timing couldn't be more critical. Beijing has ramped up military exercises around Taiwan throughout 2024, testing its capabilities while vowing to reclaim the island by force if necessary. Washington reaffirmed its Taiwan commitment during Chinese military drills in April.
Under Lutnick's 50-50 plan, America would still be "fundamentally reliant" on Taiwan but would have domestic capacity to "do what we need to do, if we need to do it." The proposal essentially rewrites the strategic calculus that has defined U.S.-Taiwan relations for decades.
Samsung and other Asian chipmakers have already begun shifting production to meet U.S. demands, but TSMC remains the crown jewel. The company has been building Arizona facilities since 2020, with production expected to begin next year.
U.S.-Taiwan trade negotiations are ongoing, likely determining which Taiwanese companies face the proposed 100% tariffs and which qualify for domestic investment exemptions.
Lutnick's 50-50 proposal represents more than industrial policy - it's a fundamental reimagining of how America approaches both economic security and Taiwan relations. If successful, the plan would end decades of U.S. semiconductor dependence while testing whether Taiwan's defense really requires maintaining its near-monopoly on advanced chips. The $500 billion question is whether America can build domestic capacity fast enough to match Taiwan's technological lead, or if this gambit will simply push critical production elsewhere in Asia.
