Small and medium enterprises make up the backbone of Taiwan’s economy, yet large corporations such as Taiwan Semiconductor Manufacturing Co (TSMC) play a crucial role in shaping its industrial structure, economic development and global standing.
The company reported a record net profit of NT$374.68 billion (US$11.41 billion) for the fourth quarter last year, a 57 percent year-on-year increase, with revenue reaching NT$868.46 billion, a 39 percent increase.
Taiwan’s GDP last year was about NT$24.62 trillion, according to the Directorate-General of Budget, Accounting and Statistics, meaning TSMC’s quarterly revenue alone accounted for about 3.5 percent of Taiwan’s GDP last year, with the company’s full-year revenue expected to represent an even higher share.
However, when considering actual GDP contribution (value-added impact) — excluding imported equipment and materials — the net effect is estimated to be about 5 or 6 percent.
Additionally, TSMC supports about 1,600 Taiwanese suppliers, highlighting its extensive economic footprint. While Taiwan’s N+1 policy aims to retain cutting-edge technology, overseas expansion might lead to talent outflow, impacting Taiwan’s long-term research and development capabilities.
On the economic front, Taiwan’s semiconductor industry output reached NT$4.3 trillion, accounting for 18 percent of GDP and contributing 60 percent of total exports, the Ministry of Economic Affairs has said.
TSMC aims to grow its revenue by more than 20 percent this year, driven primarily by surging artificial intelligence (AI)-related demand, with AI server and processor revenue expected to double, reaching 18 percent of total sales, as reported by the Wall Street Journal.
However, exports in traditional sectors would remain challenged by China’s real estate downturn and ongoing US-China tensions.
Geopolitically, the US$52.7 billion CHIPS Act aims to reduce the US’ reliance on Taiwanese semiconductors, potentially weakening Taiwan’s strategic leverage.
If TSMC expands globally, Taiwan’s “silicon shield” could be diminished, leading to less global attention to Taiwan’s security.
To navigate these challenges, Taiwan must safeguard its technological leadership, strengthen local research and development, and diversify its industries.
From a “silicon shield” to a “global TSMC,” Taiwan’s future would depend on how well it balances global expansion with domestic competitiveness.
Gary Chen is a former associate research fellow in the Department of International Affairs at the Taiwan Institute of Economic Research.
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