Recently, there has been significant interaction between the US and Taiwan in the semiconductor industry. First, during a banquet hosted by Tsai Ing-wen for US Deputy Secretary of State Keith Krach, TSMC founder Morris Chang was the only corporate guest present, drawing attention to the US-Taiwan push for semiconductor cooperation.
The so-called “Minister of Economic Affairs” in Taiwan subsequently stated that Taiwan had indeed provided explanations to the US regarding the semiconductor ecosystem and formally addressed the issue of supply chain restructuring for the first time. A few days ago, the director of the American Institute in Taiwan, Brent Christensen, mentioned at the opening ceremony of the International Semiconductor Exhibition that the US and Taiwan should continue to cooperate to ensure that the semiconductor industry maintains its global leadership, and stated that the US federal government would continue to promote export control regulations and a “clean network”.
It should be noted that as a strategic industry, the US and the DPP authorities have been trying to promote further cooperation in this field. The US, in order to strengthen its industrial competitiveness and further strike at China’s high-tech industry, is using various means to force the global semiconductor industry chain to restructure according to its wishes, and is attempting to rally allies to establish a “de-China supply chain”, making multiple overtures to TSMC, which has advanced chip manufacturing capabilities. The Tsai Ing-wen administration, which is implementing a foreign policy of “detaching from the mainland and aligning with the US” and aims to promote a “comprehensive decoupling” across the strait, also regards the semiconductor industry as an important component of its external “economic card”, repeatedly emphasizing the critical importance of Taiwan’s “key components” production to countries in the Indo-Pacific region. Under the push of political forces, how far can US-Taiwan semiconductor industry cooperation go? What kind of impact will it have? This is worth our attention.
Objectively speaking, there is a foundation for deep cooperation between the US and Taiwan in the semiconductor industry. Although the US has experienced long-term “deindustrialization” and severe industrial outflow, its overall strength in the semiconductor field still far exceeds that of others, boasting top companies such as Intel, NVIDIA, and Qualcomm, and having significant advantages in the upstream of the industry chain (semiconductor manufacturing equipment, raw materials, industrial design software, chip design, etc.).
Taking TSMC, Taiwan’s largest semiconductor company, as an example, its relationship with the US has always been very close: in terms of revenue, based on regional classification (mainly according to the location of customer headquarters), the North American market accounted for 60% of TSMC’s total revenue in 2019; in terms of R&D, many of TSMC’s senior executives and technical backbones have studied in the US, and there is close cooperation with renowned universities such as Stanford; in terms of the supply chain, American companies like Corning play an important role among TSMC’s suppliers.
In May of this year, TSMC announced an investment of $12 billion in Arizona, USA, to produce advanced 5-nanometer chips. The US government claims that TSMC’s investment will attract a large number of downstream suppliers, potentially creating a new industrial ecosystem and promoting Arizona, which is already known for its advanced manufacturing, to form a more complete semiconductor industry cluster. This also means that under strong political intervention, the US and Taiwan may establish a so-called “de-China supply chain” and industrial ecosystem in the semiconductor field, posing certain challenges to our semiconductor industry’s breakthrough of “bottleneck” technologies.
However, the strong implementation of the “detach from the mainland and align with the US” policy by the Tsai Ing-wen administration will make US-Taiwan high-tech industry cooperation “distorted”, with Taiwanese companies facing the danger of their development autonomy being gradually eroded and being coerced into taking sides. The development of Taiwan’s high-tech industry, represented by TSMC, has actually benefited from the highly specialized division of labor and close cooperation in the globalized context, allowing Taiwanese companies to choose to delve deeply into certain niche areas and grow through a model of “rooting in Taiwan and serving the world”. If Taiwanese companies are forced to choose deep ties with the US due to political factors, gradually yielding to political or even “security” directives, their future development risks will be significant.
In fact, as the Tsai administration’s alignment with the US intensifies, the US’s direct intervention in Taiwan’s internal affairs has also increased correspondingly. According to Taiwanese media reports, during a recent visit to Taiwan by US Deputy Secretary of State Keith Krach, the topic of “investment review” was included in the discussion, which means that the US is attempting to directly intervene in the issues of mainland investment in Taiwan and Taiwanese enterprises’ foreign investments, with some critics on the island directly pointing out that this will make Taiwan an “economic colony” of the US.
Moreover, it is worth noting that aligning with the US may not change the fate of Taiwanese companies being marginalized. Even if the Tsai administration repeatedly shows goodwill to the US, in the face of American interests, Taiwan is merely a disposable “pawn”, and so are Taiwanese companies. We have seen that when the US sanctions Huawei took effect, companies like TSMC applied to continue supplying, but currently only American companies Intel and AMD have been approved to continue supplying Huawei. This practice of “excluding others and favoring American companies” demonstrates the dominance of “America First” and the firm control the US has over the semiconductor and other high-tech industry chains.
The author is an associate researcher at the Taiwan Research Institute of the Chinese Academy of Social Sciences
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