Taiwan produces more than half of the world's semiconductor chips and nearly all of the high-end ones

Taiwan "will not agree" to making 50 percent of its semiconductors in the United States, the island's lead tariff negotiator said Wednesday, as Washington pressures Taipei to produce more chips on US soil.

Vice Premier Cheng Li-chiun's remarks came after US Secretary of Commerce Howard Lutnick said he had proposed to Taiwan a 50-50 split in chip production.

"I want to clarify that this is the US's idea. Our negotiation team has never made a 50-50 commitment to a chip split," Cheng told reporters in Taipei.

"Please be rest assured that we did not discuss this issue this time, and we will not agree to such a condition," she said.

Cheng spoke after returning from Washington where she said negotiations over US tariffs on Taiwanese shipments "made some progress".

Taiwan is struggling to finalise a tariff deal with Washington, after President Donald Trump's administration imposed a temporary 20 percent levy that has alarmed the island's manufacturers.

Trump has also threatened to put a "fairly substantial tariff" on semiconductors coming into the country.

Soaring demand for AI-related technology has fuelled Taiwan's trade surplus with the United States -- and put it in Trump's crosshairs.

More than 70 percent of the island's exports to the United States are information and communications technology, which includes chips, the cabinet said in a statement Wednesday.

In a bid to avoid the tariffs, Taipei has pledged to increase investment in the United States, buy more of its energy and increase its own defence spending to more than three percent of gross domestic product.

Taiwan produces more than half of the world's semiconductors and nearly all of the high-end ones.

The concentration of chip manufacturing in Taiwan has long been seen as a "silicon shield" protecting it from an invasion or blockade by China, which claims it as part of its territory -- and an incentive for the United States to defend it.

In an interview with NewsNation broadcast over the weekend, Lutnick said having 50 percent of Taiwan's chip production in the United States would ensure "we have the capacity to do what we need to do if we need to do it".

"That has been the conversation we've had with Taiwan, that you have to understand that it's vital for you to have us produce 50 percent," he said.

"Our goal is to get to 40 percent market share, and maybe 50 percent market share, of producing the chips and the wafers, you know the semiconductors we need for American consumption, that's our objective."

Taiwan says 'will not agree' to making 50% of its chips in US