Talk of “de-Taiwanization” in relation to Taiwan Semiconductor Manufacturing Co’s (TSMC) establishment of factories in the US is a false, unrealistic and meaningless proposition that appears to have ulterior motives.
The structuring of the semiconductor industry worldwide is a result of the division of labor and cooperation among countries under the conditions created by globalization.
The US is the world leader in design, electronic automation tools and manufacturing equipment. The Netherlands is home to the leading maker of photolithography equipment. Japan is the main supplier of tools and chemicals. Taiwan is the main base for original equipment manufacturing of semiconductor components.
Without the cooperation of these countries, Taiwan would not be able to make its semiconductors. To put it simply, Taiwanese semiconductors are products of globalization.
By criticizing TSMC’s deployment in the US as “unprofitable” from an economic perspective, those say it is “de-Taiwanization” ignore an inherent characteristic of the development of the semiconductor industry, namely that globalization generates profit.
Taiwan’s strength lies in the completeness of its industrial chain, which includes world-famous companies in the fields of design, manufacturing, packing and testing, along with numerous peripheral support firms.
From a technological perspective, Taiwan is the world’s top manufacturing base for silicon wafers. Its weakness is that it relies on foreign suppliers for advanced semiconductor production equipment, while its limited supply of talent in basic scientific research and semiconductors is also cause for concern.
The US’ strength is that its semiconductor industry is at the forefront of supply and demand, putting it in a key position in the global semiconductor value chain. Notably, it has a considerable advantage in terms of research and development-intensive activities.
On the downside, the US still depends on other markets to perform key value-chain activities such as wafer fabrication, as well as assembly, packing and testing.
Consequently, Taiwan’s advantages would not just allow it to continue attracting investment. Indeed, overseas deployments by TSMC and other companies would enable them to each contribute their respective strengths, creating a win-win effect.
Taiwan can further research and develop higher-value processes and products to drive, create and make up for the deficiencies of its own industry.
Critics who question overseas deployments in terms of economic costs are deliberately denying the reality that all countries, including Taiwan, have been globalizing.
In particular, the modern world is interconnected politically and economically. Every government wishes to be self-sufficient in an industry as strategic as semiconductors.
TSMC’s deployments in the US and Japan do not suffer from the same risks and interference as happens in China, where the Chinese Communist Party directs the economy, employs “united front” tactics, puts ideology in the lead, and seeks to promote state enterprises over private ones and where “communist winds” are on the rise.
With respect to relations across the Taiwan Strait, China wants to invade Taiwan and is able to do so. If the Taiwan-US alliance is upgraded, it would boost Taiwan-US economic and trade ties, and give Taiwan better access to overseas markets that can be reached through the US.
The bargaining power of private enterprises in democratic societies cannot be underestimated. Governments and enterprises can be good partners in negotiations to create an environment conducive to industrial development, and this is something that China clearly lacks.
Seen from these perspectives, accusations of “de-Taiwanization” appear to have an ulterior motive.
Lai Rung-wei is an assistant professor and former manager of a financial company’s investment research office.
Translated by Julian Clegg
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