Leading with a 68% market share in the industry, Taiwan is home to a majority of the world’s most advanced semiconductor chips. China—approximately 1,300 miles away—wants in.
Back in May, Taiwanese officials said Chinese firms were often willing to pay Taiwanese talent 500% more for engineering roles in China. Taiwan’s labor ministry responded to these recruiting efforts by ordering job sites to remove such listings.
TSMC, a Taiwanese semiconductor firm, produces nearly 90% of the world’s most advanced chips used for AI and quantum computing applications. They’re the firm behind all of Apple’s custom chips, also supplying CPUs and GPUs for Apple, Nvidia, Qualcomm, and more.
Big plans. Under Taiwan’s President-elect Lai Ching-te, the country is set to make even more advancements in the semiconductor industry, which he said will “benefit the global economy as well.”
“As president, I will continue to assist the development of the semiconductor industry, from materials, equipment, research and development, integrated circuit design, manufacturing to wafer fabrication and testing for the industry to build a comprehensive cluster and further its development in Taiwan,” he said in his acceptance speech on Jan. 13.
China’s response to the recent election was “relatively soft,” which analyst Claire Chu said speaks to the strength of Taiwan’s economy. “I think in a way, China needs Taiwan. “I think China is hoping to be able to bring Taiwan in,” she told IT Brew.
Chu, a senior China analyst at Janes, a global open-source intelligence company, said the two nations have, first and foremost, a political relationship and that, historically, China has been working to create an environment for businesses to strategically benefit from Taiwan’s tech and talent.
“When we’re talking about China’s strategy, when it comes to Taiwan, one of the main prongs is economic integration—that means bringing Taiwanese workers to China, bringing Taiwanese technology to China…and trying to create that level of interconnection and also vulnerability between the two countries and critical industries.”
The key, however, isn’t in the tech itself but the people behind it. “At the same time, a core strength of Taiwan’s semiconductor industry is the Taiwanese people,” Chu said. “It’s going to be difficult to replicate that overseas, and new expansions are going to supplement or complement the existing industry in Taiwan.”
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Location, location, location. US semiconductor firms, like Micron and Applied Materials, have expanded to Taiwan, and Taiwan chip makers have also worked to expand to the US. TSMC is investing a hefty $40 billion as it scrambles to open up a second chip factory in Arizona, though the firm recently pushed the timeline from 2026 to 2027 or 2028 due to a lack of specialized workers.
“It will be important to see how Taiwan is able to take lessons learned domestically, and be able to work with allies and partners to build a stronger supply chain, not just for Taiwan, but for the rest of the world,” Chu said, adding that Taiwan recognizes the role that both the US and Japan play in the global semiconductor industry.
Fierce competition. In light of export control restrictions placed on China in 2022, Secretary of State Antony Blinken said previously that the US wants to uphold security as it remains a competitive force in the market. At the heart of this competition? Technology.
In a more recent conversation at the World Economic Forum on Jan. 17, Blinken said Taiwan plays an important role in the semiconductor industry, noting that their contributions “affect every person in this room and almost every person around the room, from the smartphone you carry in your pocket, to your dishwasher, to your automobile, to everything else.”
“So, small as it is, by its geography and by its extraordinary ingenuity, Taiwan plays an outsized role in the world,” Blinken said in Davos, Switzerland. “That’s why so many countries have a stake in preserving peace, in preserving stability. And again, it’s not just us saying this to Beijing; it’s country after country. They say it in different ways, some more quietly than others, but everyone has the same interest.”