Taiwan to Lead Democratic High-Tech Supply Chain with US Partnership
Taiwan has initiated a strategic partnership with the United States to establish a “democratic” high-tech supply chain. This move comes in the wake of a recent tariff deal, which aims to enhance collaboration in artificial intelligence (AI) and semiconductor production. Taipei’s chief negotiator disclosed these details on January 20, 2023, emphasizing the significance of this partnership for both countries.
Overview of the New Tariff Agreement
The freshly negotiated tariff deal will allow Taiwanese chipmakers to invest significantly in U.S. production facilities. Companies like Taiwan Semiconductor Manufacturing Company (TSMC) will benefit from reduced tariffs on semiconductor imports, incentivizing local investments in AI-centric technologies.
Investment and Tariff Reductions
- Broad tariffs on Taiwanese exports to the U.S. will decrease from 20% to 15%.
- An investment of $250 billion will be directed towards enhancing semiconductor and energy production in the U.S.
- Additionally, Taiwan promises another $250 billion in credit to encourage further investment.
This strategy underscores Taiwan’s resolve to support its high-tech industries while simultaneously expanding their presence internationally, particularly in the U.S. market. Vice Premier Cheng Li-chiun reassured that this agreement is intended to strengthen Taiwan’s chip industry rather than dismantle it.
Chipmaker Benefits Under the Agreement
Under this agreement, chipmakers that boost production in the U.S. will have the advantage of importing up to 2.5 times their new semiconductor capacity without extra tariffs. This preferential treatment applies to chips exceeding the import quota as well.
Cheng noted that Taiwan has secured advanced preferential treatment concerning any future Section 232 measures on semiconductor imports. These measures are part of an ongoing U.S. national security investigation into essential products.
The Future of Taiwan-U.S. Collaboration
Taiwan’s Vice Premier expressed optimism about the future, stating, “We hope in the future it will be ‘Taiwan-U.S. can lead’.” This reflects their ambition to build a robust high-tech supply chain together, emphasizing their commitment to AI development.
The U.S. remains Taiwan’s primary ally, especially in terms of military support, despite the absence of formal diplomatic relations between the two nations. Meanwhile, China continues to assert its claims over Taiwan, raising regional tensions.
The agreement signifies a pivotal moment for Taiwan to strengthen its role in global technology supply chains, particularly in the AI sector, aligning closely with U.S. interests.
