5 Major Impacts of Taiwan’s Rejection of US Demand to Relocate 40% of World Chip Production

Jakarta, Pintu News – Taiwan recently flatly rejected the United States’ request to move up to 40% of semiconductor production capacity from the island to the US, calling it “impossible”. This decision has far-reaching implications for the global tech industry, chip competition, and even digital asset ecosystems such as crypto. The policy reflects the growing tension in the global high-tech supply chain.

1. Taiwan insists it may not relocate 40% of chip production

Taiwan Vice Premier Cheng Li-chiun told the media that the US’ goal of moving 40% of its chip production into the country is unrealistic because a manufacturing ecosystem that has been integrated for decades cannot be simply moved. The island’s robust infrastructure and supply chains make such a relocation almost impossible in the short term.

Cheng explained that while Taiwan is open to investing overseas – including in the US – core manufacturing capacity will still develop in Taiwan. This statement confirms Taiwan’s commitment to remain a global semiconductor center.

This rejection comes amid strong US demands to strengthen domestic chip production for national security and technology competition reasons. The US wants to reduce reliance on overseas production, especially those in close proximity to China.

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2. Chip Industry Tensions 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 that too much dependence on Taiwan and other regions triggers strategic risks.

This effort is part of the US strategy to achieve 40% domestic chip production by 2029, an ambitious target given Taiwan Semiconductor Manufacturing Company’s (TSMC) current dominance in advanced chip manufacturing.

However, Taiwan considers that their semiconductor sector serves as a “silicon shield” that is not easily moved, as it involves hundreds of suppliers and skilled workers that make up the unique ecosystem.

3. Impact on TSMC’s US Investment and Expansion

Despite Taiwan’s resistance to a major relocation, the world’s largest chipmaker TSMC is expanding its operations in the US with a major investment in Arizona. TSMC’s megafab project in Arizona includes the production of advanced process chips up to 2 nm and 3 nm which is targeted to be operational by the end of the decade.

This expansion helps fulfill the US goal of strengthening domestic production capabilities without displacing mature capacity in Taiwan. This creates a balance between local investment and maintaining a major production base on the island of Taiwan.

Such a strategy may have a positive impact on the US economy and bilateral technology relations, but it does not change the fact that Taiwan remains a leading production center globally.

4. Global Technology Supply Chain Implications

Taiwan’s rejection reflects the complex dynamics of the technology supply chain. The semiconductor industry is highly dependent on coordination between component suppliers, skilled labor, and long-term investment. Moving a massive production line is not just a matter of building a new factory, but also moving the entire supporting ecosystem.

Therefore, although investments in other countries are ongoing, advanced capacities such as 3 nm and 2 nm fabrication remain centralized in Taiwan. This confirms that Taiwan’s dominance in advanced chip production is likely to last at least until the end of this decade.

From a global perspective, Taiwan’s decision also affects the strategies of other countries seeking to build their own domestic chip industries, including the US, Japan, and countries in Europe that are racing to strengthen their high-tech manufacturing capacity.

5. Relevance to the Crypto and Technology Industry

The global chip movement is also relevant to the crypto industry, especially for areas that require heavy computing such as mining or AI model training for market analytics and digital asset price prediction. The availability of advanced chips affects computing technology innovation in the crypto and Web3 ecosystem.

Semiconductor technology plays a role in the development of hardware that supports blockchain network security and increased transaction speeds. Uncertainty in the chip supply chain can affect the production costs of mining hardware and other computing infrastructure.

As global technology relations continue to evolve, geopolitical decisions such as these show how the semiconductor industry and digital assets have increasingly complex interrelationships.

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Reference

• Cryptopolitan. Taiwan rejects ‘impossible’ US demand to relocate 40% of chip production. Accessed February 10, 2026.