Taiwan has recently firmly rejected the United States' request to relocate up to 40% of its semiconductor production capacity from the island to the U.S., calling it 'impossible'. This decision has far-reaching implications for the global technology industry, chip competition, and even the digital asset ecosystem like crypto. The policy reflects the increasing tensions in the global high-tech supply chain.
1. Taiwan Asserts Relocation of 40% Chip Production is Impossible
Taiwan's Vice Premier Cheng Li-chiun stated to the media that the U.S. goal of relocating 40% of its chip production domestically is unrealistic because the integrated manufacturing ecosystem developed over decades cannot be easily transferred. The strong infrastructure and supply chains spread across the island make such relocation nearly impossible in the short term.
Cheng explains that although Taiwan is open to investing abroad — including in the US — core manufacturing capacity will continue to develop in Taiwan. This statement reaffirms Taiwan's commitment to remain a global semiconductor hub.
This rejection comes amid strong US demands to strengthen domestic chip production for national security and technological competition reasons. The US wants to reduce dependence on foreign production, especially from areas close to China.
2. Tensions in the Chip Industry Amid National Security Goals
The US government, through officials such as Commerce Secretary Howard Lutnick, has voiced the need to bring most chip production back to US soil for national security reasons. The US considers excessive dependence on Taiwan and other regions poses strategic risks.
These efforts are part of the US strategy to achieve 40 % domestic chip production by 2029, an ambitious target given the dominance of Taiwan Semiconductor Manufacturing Company (TSMC) in advanced chip manufacturing today.
However, Taiwan believes that their semiconductor sector acts as a “silicon shield” that is not easily transferable, as it involves hundreds of suppliers and skilled workers that form this unique ecosystem.
3. Impact on TSMC's Investments and Expansion in the US
Despite Taiwan's rejection of large-scale relocation, the world's largest chip company, TSMC, continues to expand its operations in the US with a significant investment in Arizona. TSMC's megafab project in Arizona includes advanced process chip production down to 2 nm and 3 nm targeted for operation by the end of this decade.
This expansion helps meet US goals to strengthen domestic production capabilities without relocating mature capacity from Taiwan. It creates a balance between local investment and maintaining a core production base on the island of Taiwan.
Such strategies can have positive impacts on the US economy and bilateral technology relations, but do not change the fact that Taiwan remains a leading global production center.
4. Implications of the Global Technology Supply Chain
Taiwan's rejection reflects the complex dynamics in the technology supply chain. The semiconductor industry is highly dependent on coordination among component suppliers, skilled labor, and long-term investment. Relocating massive production lines is not just about building new factories, but also about moving the entire supporting ecosystem.
Therefore, even though investment in other countries is ongoing, advanced capacities such as 3 nm and 2 nm fabrication remain centered in Taiwan. This underscores that Taiwan's dominance in advanced chip production is likely to persist at least until the end of this decade.
From a global perspective, Taiwan's decision also influences the strategies of other countries trying to build their own domestic chip industries, including the US, Japan, and European countries that are racing to strengthen high-tech manufacturing capacity.
5. Relevance for the Crypto and Technology Industry
The global movement of chips is also relevant to the crypto industry, especially for areas requiring heavy computing such as mining or training AI models for market analytics and digital asset price prediction. The availability of advanced chips impacts technological innovation in the crypto and Web3 ecosystem.
Semiconductor technology plays a role in the development of hardware that supports blockchain network security and increases transaction speed. Uncertainty in the chip supply chain can affect the production costs of mining hardware and other computing infrastructure.
With the global technology relationships continuously evolving, geopolitical decisions like this illustrate how the semiconductor and digital asset industries have increasingly complex interconnections.
