The government should step up financial support for local semiconductor companies and equipment manufacturers to ensure that Taiwan can safeguard its position in the world’s chip market as the industry advances its semiconductor technology.
Taiwan is one of the world’s biggest chip exporters, but it relies heavily on foreign companies to supply manufacturing equipment. Last year, local chip companies spent about NT$720 billion (US$22.97 billion) sourcing semiconductor manufacturing equipment, yet only 12 percent of that equipment was produced locally, SEMI statistics showed.
However, Taiwanese semiconductor companies performed well financially over the past two years, with numerous firms reporting record net profit. This can be attributed to the unprecedented chip crunch during COVID-19 pandemic restrictions, the thriving digital economy and escalating geopolitical tensions.
Taiwan’s low-paid but excellent semiconductor talent helps to bridge the cost gap with global rivals. With strong manufacturing capabilities, local chip companies including Taiwan Semiconductor Manufacturing Co (TSMC) and GlobalWafers Co have gained the world’s attention and have been encouraged to build overseas capacity in countries such as the US, Japan and Germany — countries willing to offer significant subsidies, tax incentives, low utilities fees and free land to boost semiconductor supply resilience. TSMC and GlobalWafers have committed to investments of US$12 billion and US$55 billion to build new US plants.
The success of Taiwanese chip companies was not achieved overnight. It is the result of heavy investment in research and development (R&D) over a long time. To maintain robust growth, Taiwan’s chip firms are embarking on a new wave of investments in third-generation semiconductor technologies, which use silicon carbide (SiC) or gallium nitride (GaN) to replace silicon, the material currently used to make chips. Third-generation semiconductor materials have high switching speeds and are small, highly efficient and fast-cooling. SiC and GaN chips are suitable for electric vehicles, charging piles and power storage devices — products in the new “blue ocean” market.
The SiC and GaN markets are expected to deliver compound annual growth rates of 34 percent and 59 percent respectively, to reach US$6.3 billion and US$2 billion in 2027, GlobalWafers said.
Taiwan has a minimal exposure to SiC and GaN supply chains, accounting for 7.8 percent and 6 percent of global production respectively. Local semiconductor companies have difficulty competing with global rivals to enter the third-generation semiconductor market, which is currently dominated by US, European and Japanese companies. The technology barrier is high and compounded by limited equipment availability.
As the SiC and GaN markets are smaller than the established silicon-based market, profit returns take longer and require higher R&D investments — it is a big risk and burden for local firms to shoulder. Local companies need stronger support from the government to encourage them to continue investing in emerging technologies and help them gain a share of the third-generation semiconductor market.
The Ministry of Economic Affairs in March launched a new funding program to foster local third-generation semiconductor equipment suppliers, yet the R&D subsidy of about NT$200 million a year for two years is insufficient. It remains uncertain if the ministry would extend this funding project.
If the equipment bottleneck remains unresolved, Taiwan would struggle to enter the new semiconductor markets. As the semiconductor industry is a key pillar of the nation’s economy, the government should increase financing for third-generation semiconductor technology to protect the industry and the economy.
With each passing day, the threat of a People’s Republic of China (PRC) assault on Taiwan grows. Whatever one’s view about the history, there is essentially no question that a PRC conquest of Taiwan would mark the end of the autonomy and freedom enjoyed by the island’s 23 million people. Simply put, the PRC threat to Taiwan is genuinely existential for a free, democratic and autonomous Taiwan. Yet one might not know it from looking at Taiwan. For an island facing a threat so acute, lethal and imminent, Taiwan is showing an alarming lack of urgency in dramatically strengthening its defenses.
More than seven months into the armed conflict in Gaza, the International Court of Justice ordered Israel to take “immediate and effective measures” to protect Palestinians in Gaza from the risk of genocide following a case brought by South Africa regarding Israel’s breaches of the 1948 Genocide Convention. The international community, including Amnesty International, called for an immediate ceasefire by all parties to prevent further loss of civilian lives and to ensure access to life-saving aid. Several protests have been organized around the world, including at the University of California Los Angeles (UCLA) and many other universities in the US.
Every day since Oct. 7 last year, the world has watched an unprecedented wave of violence rain down on Israel and the occupied Palestinian Territories — more than 200 days of constant suffering and death in Gaza with just a seven-day pause. Many of us in the American expatriate community in Taiwan have been watching this tragedy unfold in horror. We know we are implicated with every US-made “dumb” bomb dropped on a civilian target and by the diplomatic cover our government gives to the Israeli government, which has only gotten more extreme with such impunity. Meantime, multicultural coalitions of US
I still remember the first time I heard about the possibility of an invasion by China. I was six years old. I thought war was coming and hid in my bed, scared. After 18 years, the invasion news tastes like a sandwich I eat every morning. As a Gen Z Taiwanese student who has witnessed China’s harassment for more than 20 years, I want to share my opinion on China. Every generation goes through different events. I have seen not only the norms of China’s constant presence, but also the Sunflower movement, wars and people fighting over peace or equality,