Taiwan's government has rejected calls from U.S. officials to shift a large portion of semiconductor manufacturing to America, stating that relocating 40% of the island's chip production is not feasible, reports Reuters . The authorities expect companies like TSMC and UMC to keep expanding their production capacity on the island, even though TSMC is now actively expanding overseas and other countries are looking for the onshoring of chipmaking.

Vice Premier Cheng Li-chiun said in an interview with Taiwanese television station CTS that she had clearly told the U.S. government that Taiwan's semiconductor ecosystem cannot simply be transferred elsewhere. The semiconductor sector will continue expanding domestically, while overseas investments — including those that TSMC makes in its U.S. production capacity — will proceed only alongside continued growth at home.

According to Cheng, Taiwan's overall semiconductor capacity — including existing fabs as well as future projects — is expected to exceed investments made in the United States or any other country.

The comments are a response to the recent statements by U.S. Commerce Secretary Howard Lutnick, who said that concentrating a large portion of global semiconductor production close to China represented a strategic vulnerability. He also indicated that the goal of the U.S. government is to increase the country's share of the market of leading-edge semiconductor manufacturing to 40% in three years, by the end of President Trump's current term.

How that can be possible, given the fact that it takes three years to build a fab in the U.S. and then about a year to ramp it, is something Lutnick did not disclose. Yet he warned that if such goals are not achieved, tariffs on Taiwan-made goods could potentially increase to as much as 100%.

In earlier remarks, Lutnick also described a scenario in which leading-edge semiconductor production could be split roughly evenly between Taiwan and the United States, which indicates that the U.S. government has a fairly flexible position when it comes to actual market share numbers.

By contrast, Taiwanese officials reiterated that there are no plans to relocate the island's science parks, which form the core of its semiconductor manufacturing ecosystem, and are indispensable parts of the country's so-called silicon shield. Nonetheless, Taiwan authorities have no problems with TSMC expanding overseas as long as its most advanced technologies remain in Taiwan.

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