Taiwan is considering the creation of a high-tech strategic partnership with the United States, as Washington seeks greater Taiwanese investment and industrial cooperation, Taiwan’s top tariff negotiator said on Thursday.
Taiwan — home to the world’s leading contract chip manufacturer, TSMC — currently faces a 20% U.S. tariff on its exports and is looking to negotiate a reduction. The initiative comes as both economies explore deeper technological collaboration amid growing global competition over semiconductor supply chains.
Vice Premier Cheng Li-chiun, who heads Taipei’s delegation in the ongoing tariff talks, said she remains optimistic about reaching a consensus with the U.S. on what she called a “Taiwan model” for investment.
“The current negotiation focus is that the United States expects us to expand investments and engage in supply chain cooperation,” Cheng told reporters in Taipei after returning from Washington.
She emphasized that Taiwan’s approach would not involve relocating its core supply chains, but rather expanding production capacity on U.S. soil in strategic sectors. The plan would include export credit guarantees, joint R&D projects, and the co-development of industrial clusters between the two countries.
TSMC’S ROLE AND THE U.S. EXPECTATIONS
While the U.S. has expressed interest in more domestic semiconductor production, Cheng clarified that TSMC was not directly involved in the latest negotiation round. The company, currently investing $165 billion in chip plants in Arizona, continues to keep most of its production operations in Taiwan.
She also dismissed recent reports that U.S. Commerce Secretary Howard Lutnick had proposed a 50-50 chip production split, saying:
“That idea was not raised in our talks, and it is not something Taiwan would agree to.”
Cheng noted that Washington’s priority appears to be strengthening its domestic chip production to reduce supply chain dependence on Asia, while Taiwan’s long-term strategy is to stay rooted at home but expand globally through bilateral cooperation.
INDUSTRIAL PARTNERSHIP, NOT RELOCATION
The envisioned “Taiwan model,” Cheng said, represents a strategic partnership framework—one where the island’s companies would invest in R&D and manufacturing capacity abroad, supported by governmental financial and policy mechanisms, without shifting their operational core from Taiwan.
Neither the U.S. Commerce Department nor the Office of the U.S. Trade Representative has commented publicly on the discussions, which continued as the U.S. government entered a temporary shutdown this week.
With Taiwan’s semiconductor industry playing a pivotal role in the global AI and electronics boom, both Taipei and Washington are looking to balance national security priorities with economic growth.
“Our aim,” Cheng concluded, “is to remain rooted in Taiwan, deploy around the world, and build bilateral strategic cooperation that supports both sides’ technological ambitions.”