TAIPEI (Taiwan News) —  The Financial Times’ Tech Tonic podcast spoke with Taiwanese tech figures to learn how overseas chip manufacturing will threaten Taiwan’s security. 

In the episode “The geopolitics of chips — Taiwan’s silicon shield” on Tuesday (Nov. 26), government and industry leaders debated the theory that Taiwan's chip dominance deters China's aggression. Journalist James Kynge noted that most Taiwanese do not feel they are under imminent threat of attack, perhaps due to the chip sector's importance to national security.

“The Taiwanese are seen as the best in the world at the complex job of manufacturing chips,” Kynge said. “It’s a reputation they’ve spent 40 years building.” 

Michael Wang, an industry veteran at Taiwanese chipmaker UMC, used the phrase “the holy mountain to protect the island (護國神山)” to explain how chips help protect Taiwan. Wang said economic growth depends on the chip industry, and a conflict would affect all countries, including China, who rely on chips from Taiwan.

However, western governments are worried about their dependence on Taiwan for chips. Using Taiwan’s expertise, the US, Germany, and Japan have attempted to begin producing semiconductors domestically.

Taiwan Semiconductor Industry Association President Wu Chih-i (吳志毅) said some of his foreign friends told him that if it were not for chips, most foreign companies would not care if Taiwan gets taken over by China.   

Asked whether security lies in chipmaking staying in Taiwan, Wu said some days yes. Wu said Western countries will someday rely less on Taiwan's chips, but probably not for 10 to 20 years. He noted it took Taiwan 40 to 50 years to get to its position today.  

FT correspondent in Taiwan Kathrin Hille reported on TSMC when it was first setting up a factory in Arizona. According to Hille, “Both the Taiwan government and TSMC themselves pushed back very hard.” 

“The Taiwan government, they tried again and again telling visiting US officials that they want Taiwan to remain the world’s chip supplier and not just somewhere, but right here in Taiwan,” Hille said. 

In 2022, TSMC founder Morris Chang (張忠謀) reportedly told former US House Speaker Nancy Pelosi that American efforts to rebuild its chip industry would fail. Kynge reported in the podcast’s first episode that progress has indeed been slow. 

Hille said the building of fabs outside Taiwan has made the government aware they can not rely on the “silicon shield” forever.

Countries will never be able to produce enough chips to replace the supply in Taiwan if a Chinese invasion occurs, according to Hille. The TSMC fabs overseas would account for about 15% of global capacity, which creates an emergency supply but not a replacement.

Hille said, “TSMC was forced both by political pressure from the US government and also from their customers to invest elsewhere … a lot bigger than they had initially intended to.” She said Taiwan’s government believes if its role as a chip manufacturing center is affected, it can build its position as a new investor and employer.

According to Taiwan’s science and technology minister Wu Cheng-wen (吳誠文), “We can take advantage of the very important company. We can take advantage of it to make friends.”

According to Wu, “We don’t have so many countries who we consider friends to us in the past. But then, because of TSMC, Japan and Germany became more friendly to us.” He said that companies overseas are pleased with TSMC’s investments because they improve their economies.  

Wu dismissed concerns that overseas chip manufacturing would threaten Taiwan’s security. He pointed to the increasing demand for computer chips, saying Taiwan’s chip companies like TSMC will only expand.

All Taiwanese worry about a China invasion, the minister said, “but we have been living in this situation for the past 50 years, so we still have to do things, do our job, and … live our life even under this kind of tension or risk.” 

“If we keep producing the best chip in the world, we’ll be safer,” Wu added. “We have to do our job to make this island kind of important enough for the people around the world, care about that and we’ll be safe.”