Taiwan pressured to move 50% of chip production to US or lose protection

The Trump administration is pressuring Taiwan to rapidly move 50 percent of its chip production into the US if it wants ensured protection against a threatened Chinese invasion, US Commerce Secretary Howard Lutnick told NewsNation this weekend.

In the interview, Lutnick noted that Taiwan currently makes about 95 percent of chips used in smartphones and cars, as well as in critical military defense technology. It's bad for the US, Lutnick said, that "95 percent of our chips are made 9,000 miles away," while China is not being "shy" about threats to "take" Taiwan.

Were the US to lose access to Taiwan's supply chain, the US could be defenseless as its economy takes a hit, Lutnick alleged, asking, "How are you going to get the chips here to make your drones, to make your equipment?"

"The model is: if you can't make your own chips, how can you defend yourself, right?" Lutnick argued. That's why he confirmed his "objective" during his time in office is to shift US chip production from 2 percent to 40 percent. To achieve that, he plans to bring Taiwan's "whole supply chain" into the US, a move experts have suggested could take much longer than a single presidential term to accomplish.

To start with, Taiwan must be convinced that it's not getting a raw deal, he noted, explaining that it's "not natural for Taiwan" to mull a future where it cedes its dominant role as a global chip supplier, as well as the long-running protections it receives from allies that comes with it.

To close the deal with Taiwan, Lutnick suggested that the US would offer "some kind of security guarantee" so that "they can expect" that moving their supply chain into the US won't eliminate Taiwan's so-called "silicon shield," where countries like the US are willing to protect Taiwan because "we need their silicon, their chips, so badly."

According to Lutnick, Taiwan can also be assured through the deal that the US will remain "fundamentally reliant" upon Taiwan, as the producer of the other 50 percent of chips.

However, he also claimed that if the US acquired a 50 percent market share, it would ensure that the US has "the semiconductors we need for American consumption," emphasizing that the move is intended to decrease reliance on Taiwan. Lutnick also went on in the interview to explain how US workers would benefit from moving Taiwan's supply chain into the US, saying that another major focus of his time in office will be training workers to help the domestic semiconductor industry flourish.