To adapt to global dynamics, countries are increasingly focusing on building resilience in semiconductors to become more self-reliant and reduce import dependencies.
In 2015, Beijing launched the “Made in China 2025” plan, and recently, the 20th Central Committee of the Chinese Communist Party (CCP) emphasized the dual role of high-tech development in driving economic growth and ensuring national security while minimizing reliance on external sources.
Similarly, the US and the EU have introduced legislation to bolster their semiconductor ecosystems and decrease dependence on external partners — which is called the CHIPS Act in the US and the European Chips Act in the EU.
These acts aim to reinforce domestic semiconductor capabilities and secure supply chains.
Southeast Asia is also striving to become a semiconductor hub, although some countries are still in the early stages of this endeavor.
This trend toward greater self-reliance on semiconductors reflects the increasing importance of securing these critical technologies, especially in an era of rising global tensions.
Taiwan holds a leading position in the global semiconductor industry, but its dominance might be challenged, as other countries intensify their efforts. Although it would take time for these countries to catch up, Taipei needs to implement effective policies to maintain its critical role in the high-tech sector.
Beyond semiconductors, artificial intelligence (AI) is one of the most advanced technologies today, and there is a strong interrelationship between AI and semiconductor advancements.
AI has driven the development of specialized semiconductor technologies, while improvements in semiconductor manufacturing have accelerated AI progress. Given Taiwan’s semiconductor leadership, it is well-positioned to focus on AI development and establish itself as a leader in this field.
In his inauguration speech in May, President William Lai (賴清德) said Taiwan’s ambition is to transition from a “silicon island” to an “AI island.”
“As we meet the global challenges of adopting more smart technologies, we in Taiwan must expedite our transformation into an ‘AI island,’” he said.
This strategic focus on AI could provide Taiwan with a significant advantage in the global technology race, setting it apart from other countries competing in the semiconductor arena.
In line with Lai’s core national development strategy, Taiwan has launched the “5+2 Industrial Innovation Plan” to drive industrial growth and establish a new model for sustainable development. This plan focuses on seven key areas: intelligent machinery, Asia Silicon Valley, green energy, biomedicine, national defense and aerospace, new agriculture and the circular economy.
A key component of this plan is the Asia Silicon Valley project, which highlights the importance of AI. Recognizing AI as a foundational technology for future smart devices and a catalyst for new semiconductor innovations, the government introduced the AI-on-Chip Program in 2019, which aims to spearhead advancements in AI chip technology.
The AI-on-Chip Taiwan Alliance (AITA) was launched in conjunction with the AI-on-Chip Program to unite more than 100 companies, research organizations and universities. AITA has formed four Special Interest Groups (SIGs): AI Chip Application, Heterogeneous AI Chip Integration, Emerging AI Processing Architecture and AI System Software.
The objectives of AITA and its SIGs include reducing research-and-development costs by up to 90 percent, shortening product development time by six months, doubling chip performance, developing critical intellectual properties for AI chips and creating a robust ecosystem for AI innovation and application.
Guided by the “5+2 Industrial Innovation Plan,” AITA aims to leverage Taiwan’s semiconductor and information communication technology strengths to advance global AI technologies and reinforce Taiwan’s leadership in the field.
Taiwan is not only solidifying its position in the semiconductor industry, but also expanding into AI development. To meet demand and ensure resilience in the event of a worst-case scenario in the Taiwan Strait or elsewhere, Taipei is diversifying its manufacturing across several countries and regions, including the US, Japan and Southeast Asia.
Despite this, research and development must remain in Taiwan to prevent technology transfer.
Taiwan is also encouraging foreign companies to establish research-and-development centers in the nation. Microsoft, Amazon and Google have already set up research-and-development facilities in Taiwan, positioning it as a hub for further international collaboration. The challenge now is how Taiwan can attract more companies amid shifting geopolitical dynamics.
To attract these companies, Taiwan must demonstrate that its advancements in AI, supported by its competitive edge and unique advantages, make it an ideal location for high-tech research and development.
As Industrial Development Administration Deputy Director-General Chen Pei-li (陳佩利) said: “We are no longer working in or producing the traditional factories that most people imagine — our factories now have ‘brains’ and ‘intelligence.’”
By establishing itself as a key research hub and fostering connections with foreign firms, Taiwan aims to enhance the value of its high-tech sector and make any potential conflict more costly. This strategy not only seeks to advance Taiwan’s high-tech industry and boost its economy, but also contributes to national security. While this approach alone might not completely deter China from invading, increasing interdependence could make any aggressive action more costly and require more careful deliberation.
Taiwan has increasingly shifted toward producing complete AI hardware solutions.
Taiwanese manufacturers supply more than 90 percent of AI servers worldwide, with every major US brand relying on Taiwanese sources for their AI server needs, Ministry of Economic Affairs data showed.
Taiwan is also responsible for about two-thirds of global AI server production, underscoring its critical role in the global high-tech sector.
Taiwan must demonstrate to foreign companies the value of establishing research-and-development centers in Taiwan, especially amid concerns about cross-strait tensions.
Despite geopolitical tensions, some companies remain committed. Nvidia, a leading US AI company, has selected Taiwan as the location of its first Asian AI research-and-development center. Although Nvidia CEO Jensen Huang (黃仁勳) has Taiwanese origins, his decision also reflects the nation’s unique combination of high-level talent, advanced hardware and robust infrastructure.
Nvidia’s investment could encourage other major technology companies to consider Taiwan for further investment.
Companies such as Applied Materials, Inc, Dutch semiconductor equipment maker ASML and wafer producer Lam Research Corp are eyeing Taiwan. These investments would enhance Taiwan’s security by fostering shared interests between global technology firms and the country.
In the 21st century, global technological competition is more intense than ever. Major countries such as the US and China see technological advancement as being critical to national security. Taiwan, as part of this global dynamic, can leverage its technological strengths as a key element of its self-defense strategy. For an autonomous nation such as Taiwan, harnessing this technological edge is essential to counterbalance its lack of international status.
Just as the US and the Soviet Union competed in space exploration during the Cold War, today’s competition revolves around high-tech advancements. Every nation needs a strategic development plan tailored to its unique strengths to thrive in this competitive landscape.
Tran Thi Mong Tuyen is an academic at National Cheng Kung University. She is a former Ministry of Foreign Affairs fellow and visiting scholar at National Taiwan University.
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