Taiwan considers high-tech strategic partnership with United States

TAIPEI (Reuters) -Taiwan is considering forming a high-tech strategic partnership with the U.S., which wants increased Taiwanese investment, the island's top tariff negotiator said on Thursday, giving an update on talks with Washington.

Taiwan, home to the world's biggest contract chipmaker TSMC, runs a large trade surplus with the United States. The island's exports to the U.S. are currently subject to a 20% tariff, a figure Taipei's government is seeking to cut.

Taiwan Vice Premier Cheng Li-chiun, who is leading the tariff talks with Washington, told reporters in Taipei she was hopeful both sides could reach a consensus on expanding investment in the United States through a "Taiwan model".

This would not involve relocating supply chains but rather extending and expanding U.S. production capacity, said Cheng, who returned this week from the latest round of talks.

The government views the model for investing in the country as "industrial investment planning" coupled with government support measures such as export credit guarantees and joint Taiwan-U.S. development of industrial clusters, she added.

"The current negotiation focus is that the United States expects us to expand investments and engage in supply chain cooperation," Cheng said.

Neither the U.S. Commerce Department nor the Office of the United States Trade Representative has responded to requests for comment on the talks.

The U.S. government went into shutdown on Wednesday.

TSMC, whose business is surging on strong demand for artificial intelligence applications, is investing $165 billion to build chip factories in the U.S. state of Arizona, though the bulk of its production will remain in Taiwan.

Cheng, who said TSMC did not take part in the latest talks, repeated that a proposal floated in U.S. media by Secretary of Commerce Howard Lutnick for a 50-50 split in making chips is not something Taiwan would agree to and was not brought up.

"We can clearly say that we understand that the U.S. side's hope is to increase domestic production capability to satisfy U.S. domestic demand," she added.

The aim of Taiwan's industry is to "remain rooted in Taiwan and deploy around the world, and then have bilateral strategic cooperation," Cheng said.

(Reporting by Ben Blanchard and Jeanny Kao; Editing by Lincoln Feast.)