US strikes deal with Taiwan to cut tariffs, boost chip investment

Taiwan vowed Friday to remain the world's "most important" AI chipmaker, after reaching a trade deal with the United States that will reduce tariffs on the island's shipments and increase Taiwanese investment on U.S. soil.

Taiwan is a powerhouse in producing chips -- a critical component in the global economy -- but the United States wants more of the technology made there.

The agreement "will drive a massive reshoring of America's semiconductor sector," the U.S. Commerce Department said.

Under the deal, Washington will lower tariffs on Taiwanese goods to 15 percent, down from a 20 percent "reciprocal" rate meant to address U.S. trade deficits and practices it deems unfair.

Taiwanese Premier Cho Jung-tai praised negotiators Friday for "delivering a well-executed home run" following months of talks.

"These results underscore that the progress achieved so far has been hard-won," Cho said.

Taiwan's dominance of the chip industry has long been seen as a "silicon shield" protecting it from an invasion or blockade by China -- which claims the island is part of its sovereign territory -- and an incentive for the United States to defend it.

But the threat of a Chinese attack has fuelled concerns about potential disruptions to global supply chains, increasing pressure for more chip production beyond Taiwan's shores.

"Based on current planning, Taiwan will still remain the world's most important producer of AI semiconductors, not only for Taiwanese companies, but globally," Taiwanese Economic Affairs Minister Kung Ming-hsin assured reporters on Friday.

Production capacity for the advanced chips that power artificial intelligence systems will be split about 85-15 between Taiwan and the United States by 2030 and 80-20 by 2036, he projected.

AFP