Taiwan will not agree to 50-50 chip production deal with US, negotiator says

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TAIPEI (Reuters) -Taiwan will not agree to a deal with the United States for half of all semiconductor production to take place in the country, the island’s top tariff negotiator said on Wednesday after returning home.

U.S. Secretary of Commerce Howard Lutnick told U.S. television network News Nation over the weekend that Washington’s pitch to Taiwan would be a 50-50 split in making chips, the vast majority of which are now made on the island.

Taiwan Vice Premier Cheng Li-chiun, who is leading the tariff talks with Washington, told reporters upon getting back to the island that she had not discussed the 50-50 idea suggested by the U.S. during the talks.

“Our negotiating team has never made any commitment to a 50-50 split on chips. Rest assured, we did not discuss this issue during this round of talks, nor would we agree to such conditions,” she said, according to Taiwan’s official Central News Agency.

Neither the U.S. Commerce Department nor the Office of the United States Trade Representative responded to requests for comment sent outside of U.S. business hours.

Taiwan, home to the world’s biggest contract chipmaker TSMC, runs a large trade surplus with the United States. The island’s exports to the United States are currently subject to a 20% tariff.

TSMC, whose business is surging on strong demand for artificial intelligence applications, is investing $165 billion to build chip factories in the U.S. state of Arizona, though the bulk of its production will remain in Taiwan.

Taiwan’s government said last month that it hoped for a more favourable tariff rate from the United States after talks achieved “certain progress”.

Speaking in parliament in Taipei on Tuesday, Premier Cho Jung-tai said Cheng had had multiple talks with the United States on tariff issues.

“The most critical substantive consultations are currently underway,” he said.

Cheng, speaking at the airport, said that “detailed” discussions had taken place which yielded “certain progress”, the Central News Agency added.

Separately, Taiwan’s presidential office said late on Tuesday that President Lai Ching-te had met the visiting Luke J. Lindberg, Under Secretary for Trade and Foreign Agricultural Affairs at the U.S. Department of Agriculture.

Lai said that a Taiwan agricultural delegation visiting the United States in September planned to buy $10 billion of U.S. agricultural goods over the coming four years, including soybeans, wheat, corn and beef.

(Reporting by Ben Blanchard; Editing by Shri Navaratnam and Stephen Coates)