Taiwan says it will lead 'democratic' high-tech supply chain with US

Taiwan aims to build a "democratic" high-tech supply chain with the United States and form a strategic AI partnership under the new tariffs deal it sealed with Washington last week, Taipei's top negotiator in the talks said on Tuesday.

US President Donald Trump has pushed the major producer of semiconductors, which runs a large trade surplus with the United States, to invest more in the US, specifically in chips that power AI.

Under the terms of the long-negotiated deal, chipmakers like TSMC that expand US production will incur a lower tariff on semiconductors or related manufacturing equipment and products they import into the US and will be able to import some items duty-free. Broad tariffs that apply to most other Taiwanese exports to the US will fall from 20% to 15%.

Taiwan companies will also invest $250 billion to boost production of semiconductors, energy and artificial intelligence in the US, while Taiwan will also guarantee an additional $250 billion in credit to facilitate further investment.

Speaking to reporters in Taipei, Vice Premier Cheng Li-chiun said the deal was not about hollowing out Taiwan's chip industry, which is so important for the economy it is widely referred to as the "sacred mountain protecting the country".

"This is not supply-chain relocation; rather, it is support for Taiwan's high-tech industries to extend their strength abroad - through addition, and even multiplication - to expand a strong international footprint in the United States," she said.

"In the past we said, 'Taiwan can help'," Cheng added, referring to Taiwan's past efforts to help the international community during the COVID pandemic and other crises.

"We hope in the future it will be "Taiwan-US can lead,' with the two sides joining forces and, under the wave of AI, working together to build a high-tech supply chain for the democratic camp. This is our strategic objective."

The US is Taiwan's most important backer and arms supplier, despite the lack of formal diplomatic ties. Beijing claims the democratically governed island as its own and has not ruled out the use of force to achieve its goals.