Taiwan Says Moving 40% of Its Chip Production to the US Is Impossible

News that Taiwan called a plan to move 40% of its chip production to the United States “impossible” has raised questions across industry and government. Policymakers, manufacturers, and supply chain managers need practical, clear reasons for why such a large-scale shift is unrealistic in the near term.

Why Taiwan says moving 40% of its chip production to the US is impossible

The statement reflects physical, economic, and human constraints. Taiwan’s semiconductor ecosystem developed over decades, creating dense clusters of fabs, suppliers, equipment makers, and engineering talent.

Recreating that complex ecosystem in another country is not a matter of building a few factories. It requires a coordinated buildup across many interdependent parts of the value chain.

Scale and capacity limits for moving 40% of chip production

Leading-edge fabs produce enormous volume and require continuous, optimized processes. Capacity is measured in wafer starts per month and is tightly matched to local suppliers and logistics.

Shifting 40% would require building dozens of large fabs plus supporting facilities, which is technically and financially massive.

Supply chain and materials issues

Semiconductor manufacturing depends on specialized chemicals, photomasks, gases, and precision parts. Many of these suppliers are in East Asia and Europe.

Supply chain relocation means new supplier investments, qualification cycles, and transport integrations that can take years.

Technical and human capital barriers

Experienced process engineers, equipment technicians, and supply managers are essential. Taiwan and its partners have trained many of these specialists.

Training new teams and transferring tacit knowledge is slow. That makes a rapid 40% shift impractical.

Cost and economic trade-offs

Building and operating fabs in the US is more expensive due to higher wages, land, and regulatory costs. That raises unit costs for chips produced in the US.

Higher costs affect competitiveness for non-sensitive markets and shift where production is economically viable.

Security and geopolitical considerations

Governments want resilient supply chains to reduce risk from geopolitical tensions. However, resilience strategies vary between reshoring, diversification, and alliance-based models.

Moving production entirely to one country is not always the best resilience strategy. Geographic distribution and partner networks can be more effective.

Case study: TSMC in Arizona — a realistic example

TSMC’s Arizona fab is often cited as an example of shifting production. The site demonstrates both potential and limits.

• TSMC invested billions to establish advanced packaging and foundry capacity in Arizona.
• The Arizona facility is smaller than prime Taiwan fabs and targets specific nodes and customers.
• It shows that targeted production relocation is feasible but full-scale replication of Taiwan’s output is much harder.

This case illustrates a gradual, targeted approach rather than a rapid conversion of 40% of global capacity.

Practical steps US policymakers and companies can take

If the goal is to increase US-based chip production, there are realistic, actionable steps that work within current constraints.

• Target specific segments: prioritize mature nodes that are critical for autos and industrial uses, and strategic advanced packaging.
• Invest in workforce development: fund apprenticeships, university programs, and technician training to build local expertise.
• Support supplier ecosystems: incentivize materials, equipment, and chemicals makers to set up nearby operations.
• Use public-private partnerships: combine government incentives with industry commitments for multi-year builds.
• Plan long timelines: expect multi-year to decade timelines for large-scale capacity increases.

Policy incentives and real costs

Subsidies and tax credits can lower upfront barriers for fab investment. However, ongoing operating costs will still differ by country.

Evaluating the total cost of ownership—capital, operating, logistics, and risk—helps set realistic targets.

How to set realistic targets instead of 40%

Rather than an absolute percentage target, a phased strategy works better. Set milestones for critical product categories and capability areas.

Examples of phased targets:

• Short term (2–4 years): Increase domestic production for mature nodes used in autos and power systems.
• Medium term (5–8 years): Expand packaging and assembly capacity and bring several advanced-node fabs to production.
• Long term (8–12 years): Achieve a larger share of advanced-node capacity if supplier ecosystems and talent pipelines scale successfully.

Checklist for companies evaluating relocation

• Assess which process nodes and product lines are strategic.
• Map existing supplier networks and pinpoint gaps.
• Calculate total cost of ownership, not just CapEx.
• Plan workforce and supplier training programs concurrently with construction.

Conclusion: realistic planning over headline targets

Taiwan’s statement that moving 40% of its chip production to the US is impossible is a practical assessment of current realities. It reflects scale, supply chain concentration, talent, cost, and time.

Policymakers and industry should focus on realistic, phased plans: targeted investments, supplier incentives, workforce development, and clear timelines. That approach improves resilience without chasing an impractical single-number target.