THsinchu Science Park on Taiwan’s west coast is so lush, with well-planned and clearly signed roads and modern, well-maintained buildings that from the outside, most visitors would not even realise they were visiting one of the world’s most important factories.
Once known for its fish ball street food, Hsinchu is now known as Taiwan’s Silicon Valley, a tech-centric microcosm that channels workers from schools to universities and into the world’s leading semiconductor industry that’s crucial to global supply chains.
Chips, or semiconductors, are the tiny technological components that power almost everything: your computers, your mobile phones, your cars, etc. A single chip contains tens of billions of transistors needed to make electronic devices work, and the most advanced chips (mainly made in Taiwan) contain even more.
Taiwanese semiconductors were thrust into the spotlight this week after Donald Trump rehashed old accusations that Taiwan has stolen U.S. business, using the allegation to question whether the U.S. would continue its longstanding support for Taiwan if he is re-elected president in November.
“They took over almost 100% of our semiconductor industry,” he argued in an interview with Bloomberg. “We should never have allowed that to happen.”
In some parts of Taiwan, Trump’s comments were like a gangster asking for protection money, given that the United States is Taiwan’s most important security partner in countering the threat of Chinese annexation.
There is little evidence to support Trump’s claim that Taiwan has stolen U.S. property, but there is no denying that Taiwan controls nearly 100% of the cutting edge of the global semiconductor industry.
Taiwan produces about 90% of the world’s most advanced semiconductors, most of which are produced through Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest producer and a major supplier to Apple and Nvidia.
“Taiwan was simply more competitive than other countries,” said Raymond Kuo, a political scientist at the RAND Corporation.
People walk in front of the TSMC (Taiwan Semiconductor Manufacturing Company) logo at the Taiwanese semiconductor contract manufacturing and design company’s building in Hsinchu. Photo: SOPA Images Limited/Alamy
Manufacturers like TSMC rose to prominence by focusing on research and development and relentless efficiency, allowing them to pack more transistors onto a smaller chip than their competitors. Taiwanese workers are highly educated, and in a society where salaries are low compared to the cost of living, semiconductor jobs are well-paying but highly demanding. Taiwan’s labor protection laws are much weaker than those in the United States and other countries. For Taiwanese people, working for TSMC or a similar company is seen as a prestigious job with a bright future.
“[Companies] Masters or PhD holders can run the factory in three shifts. [fabrication plants] “Every day, new chipmakers are coming in,” Kuo said. “There’s also a whole secondary industry ecosystem built to support them.”
Taiwan’s vice minister for science and technology said on Thursday that Taiwan has spent 30 to 40 years developing its industries so “it is impossible to simply replace and difficult to imitate.”
While other countries are trying to catch up, some reports suggest the gap is widening. Taiwan’s monopoly on the components that literally power the world raises concerns about the vulnerability of global supply chains, especially if China’s leaders were to one day order an invasion or attack.
“It’s not hard to imagine Beijing using its control of these production facilities to coerce other countries into submitting to its subjugation,” Kuo said. “Semiconductors will become another tool Beijing can use to coerce other countries economically and politically.”
During the pandemic, the world got a firsthand look at how a supply chain crisis and chip shortage can affect global trade, as factory closures snowballed into a global chip shortage, delaying manufacturing and sending prices of autos and other products soaring.
In response to the crisis, other countries have tried to diversify their supply sources, mainly through Taiwanese companies setting up new manufacturing plants overseas, but with limited success.
Thanks to U.S. incentives, some of Taiwan’s production has shifted to the U.S., and TSMC is spending billions to build new factories overseas, including a $65 billion investment in three factories in Arizona. In Arizona The facility revealed challenges in replicating the Taiwanese model for a variety of reasons, including differences in approaches to labor rights and worker demands.
TSMC founder and former chairman Morris Chang previously said the cost of the U.S. project would be much higher, describing it as a “wasteful, expensive and wasteful endeavor.”
For Taiwan, this advantage is a good thing from a national security perspective: Geopolitical observers call Taiwan’s semiconductor industry a “silicon shield,” serving as an incentive for the international community to keep Taiwan away from Beijing’s control.
In response to Trump’s remarks, Taiwanese officials emphasized the strength of U.S.-Taiwan relations and extensive international cooperation in the semiconductor sector (Taiwan is home to several foreign semiconductor companies), but also indicated their intention to keep Taiwan’s research and development domestic and maintain its industrial dominance.
“Diversification means countries have less reason to defend Taiwan,” Kuo said. “Why should they defend it when they can easily switch to another supplier?”
Source: www.theguardian.com
