On Monday, President Tsai Ing-wen (蔡英文) welcomed a delegation led by Indiana Governor Eric Holcomb to the Presidential Office. It marked the third visit to Taiwan by a senior US official this month, following visits by US House of Representatives Speaker Nancy Pelosi and a delegation led by US Senator Ed Markey.
Holcomb’s delegation signed two memorandums of understanding on economic cooperation and trade relations between Taiwan and Indiana, making the US’ 17th-most populous state Taiwan’s first “sister state.” However, the visit represented much more than just a twinning of Taiwan and Indiana.
On Aug. 6, US President Joe Biden signed into law the Creating Helpful Incentives to Produce Semiconductors (CHIPS) for America Act. The act seeks to promote semiconductor research, development and production in the US, and to bolster US supply chain security. This is of strategic importance for the US: Microchips are the new oil that lubricates the arteries of the global economy in the 21st century and are integral to everything from smartphones to data centers and cutting-edge military hardware.
Indiana has a long pedigree in microelectronics. Frederick Terman, one of the founders of Silicon Valley, was born in Indiana. Egyptian American Mohamed Atalla, who invented the world’s first commercially viable semiconductor, was educated at Indiana’s Purdue University. The university recently established the Krach Institute for Technology Diplomacy, in addition to a new Semiconductor Degrees Program. The state stands to become a key beneficiary of the CHIPS Act and the renaissance of the US’ semiconductor industry.
In a deft piece of technology diplomacy, Tsai gave Taiwanese semiconductors the pithy epithet “democracy chips,” and said that Taiwan stands ready to increase cooperation with democratic partners around the world to build sustainable semiconductor supply chains.
It is certainly no accident that democratic Taiwan, with its free markets and free flow of ideas, has mastered the art of high-end chip production, while authoritarian China’s state-funded semiconductor “national champions” are floundering in a sea of corruption and misdirected capital.
Taiwan’s world-beating semiconductor industry is often referred to by Taiwanese as a “sacred mountain protecting the nation” (護國神山). Since the Tsai administration appears to be gearing up to trade the nation’s precious semiconductor know-how for diplomatic gains, some might ask: If Taiwan helps its main ally diversify risk by building semiconductor fabs in the US, surely Taiwan would over time forfeit its technological advantage and devalue its currency in the eyes of Washington? Fortunately, Taiwan represents much more than a silicon megafactory, and possesses two other protective amulets:
First, Taiwan is a geostrategic island fortress. Situated in the middle of the first island chain, Taiwan prevents China’s navy — in particular its nuclear-powered ballistic missile submarines — from having free rein in the Pacific Ocean.
Second, following Beijing’s destruction of freedoms in Hong Kong, Taiwan is the last one standing: the only remaining example of a pluralistic, democratic, Chinese-speaking society in the world. Taiwan continues to provide China’s disaffected and downtrodden populace with an alternative vision, free from the shackles of the Chinese Communist Party mafia state — and punctures the lie that Chinese cannot handle freedom and that they require the strong discipline of a whipping hand or the nation would descend into chaos and abject poverty.
Tsai’s leveraging of Taiwan’s silicon advantage should prove to be an astute move that will bring tangible diplomatic benefits to the nation. Moreover, the trend of “reshoring” is unstoppable: Tsai might as well ensure that Taiwan secures the largest possible piece of the pie.
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