Why it matters: The Taiwan Semiconductor Manufacturing Company (TSMC) is well-known for producing chips used by tech giants such as Apple and Qualcomm, but it also creates them for the US military. As such, the American government is pressuring the firm to make these components in the United States to ensure there is no interference from China.

As reported by the Nikkei Asian Review, TSMC makes chips that are used in American F-35 fighter jets. The tension between China and the US is still high despite the countries signing “phase one” of a broader trade agreement this week, prompting Washington to pressure TSMC into producing in the US.

This isn’t the first time the US has made such a request. It did the same thing in November, asking TSMC to make semiconductors in America to avoid security issues, but the company is exercising caution, given the high costs of such a move.

“We have never ruled out building or acquiring a fab [semiconductor fabrication plant] in the United States, but currently there is no concrete plan," TSMC told Nikkei.

Last year, Chinese President Xi Jinping said Beijing would not rule out using force to unite China and Taiwan. With the possibility of China taking control of the island, the US doesn’t want its chips within reach of its military and tech rival.

"We've noticed that many U.S. tech executives and government officials are concerned about their country's dependence on TSMC and the security of their defense industry's supply chains," said Su Tze-yun, director of Taiwan's Institute for National Defense and Security Research.

TSMC might not have given the US government a straight “no,” but it’ll likely take a lot more pushing before the company accepts the request to move some production abroad.