“TSMC, the “protector of the nation
In a congressional hearing in February, former Google CEO Eric Schmidt pointed out that the United States relies heavily on the supply of Taiwan Semiconductor Manufacturing Corporation (TSMC, or TSMC) for its high-end computer chip needs. This statement not only highlights the importance of TSMC to the United States, TSMC, which supplies half of the world’s chips, is extremely important to many countries in the manufacture of medical devices, smart phones, advanced weapons, industrial machinery, automobiles, aircraft and other related industries, as evidenced by the recent shortage of automotive chips and the request for assistance from the government of the Republic of China.
Because of the importance of TSMC, which is known by the Taiwanese people as the “sacred mountain of protection,” U.S. officials, members of Congress and industry are concerned about the United States’ over-reliance on TSMC. The U.S. “should ensure that the Chinese Communist Party does not take control of TSMC, the world’s most important chipmaker.”
The importance of Taiwan’s semiconductor and ICT industries to the upstream and downstream ecosystems of the U.S. supply chain, as well as Taiwan’s geopolitical influence, were also mentioned by several experts in a discussion on U.S.-Taiwan high-tech cooperation at the Center for Global Taiwan Studies on Wednesday (May 19).
The Global Impact of Communist China’s Control of Taiwan
Rupert Hammond-Chambers, president of the U.S.-Taiwan Business Council, said there has been a lot of attention and discussion about security in the Taiwan Strait recently, but beyond the political and security dimensions, he believes many analysts and experts have not delved into the negative impact on the U.S. and global economy once the Chinese Communist Party takes control of Taiwan.
“What we would actually see is the disruption of production in Taiwan in a very short period of time, which would have a dramatic impact on global production. I don’t think that in a conflict in the Taiwan Strait, Communist control of Taiwan would only have a localized economic impact. It would have a global impact on manufacturing, ripple effects on capital markets and other aspects, and far-reaching effects on the economy.”
But Han said he is encouraged by the Biden administration’s demonstrated interest in solidifying and deepening relations with Taiwan, not only for the benefit of the global technology supply chain, but also for the stability and growth of the U.S.-Taiwan relationship, especially with the “appropriate and decisive policy” toward the CCP, which represents U.S. national interests at a time when the United States needs stability and economic growth.
U.S.-Taiwan Supply Chain Complementary Integration
Stephen Ezell, vice president of global innovation policy at the Information Technology and Innovation Foundation (ITIF), also noted the importance of Taiwan’s semiconductor and information and communications technology (ICT) industries to the U.S. and global supply chain, and that increased U.S.-Taiwan cooperation in this area could help achieve a more equal footing in competition with China.
He said the U.S. is Taiwan’s second largest trading partner, and one-third of its imports from Taiwan are ICT products. Taiwan’s semiconductor industry is more important than any other industry in the U.S.-Taiwan trade relationship, and 86 percent of Taiwan’s exports to the U.S. are semi-finished products that U.S. manufacturers need to reprocess, so the health of Taiwan’s production chain will also have a direct impact on U.S. upstream manufacturers in ICT and other medical equipment, machinery, heavy machinery, textbooks, chemical and pharmaceutical equipment, etc. The U.S.-Taiwan industrial chain has complementary characteristics, so the entire upstream and downstream supply chains maintain a closely integrated relationship.
“In fact, researchers found that the U.S. has deeper trade links with Taiwan than any other East Asian partner, and the proportion of Taiwan’s exports injected into the U.S. global supply chain far exceeds that of Indonesia, the Philippines and Thailand combined.”
Therefore, Isbell emphasized that to overcome the challenges posed by the Chinese Communist Party in the field of technology, the U.S. and Taiwan must strengthen cooperation to enhance their R&D capabilities and combine their capabilities in hardware and software to win the competition with the Chinese Communist Party, so the Endless Frontier Act and the American Chip Act proposed by the U.S. Congress will invest a lot of money in the U.S. semiconductor and ICT industries, which is a very important investment to strengthen U.S. R&D and competitiveness. This is a very important investment for strengthening U.S. R&D and competitiveness.
Challenges for Taiwan’s high-tech industry
However, Lee also mentioned that although it plays an important role in the global technology supply chain, Taiwan itself has some challenges that must be overcome, including cyber attacks from the Chinese Communist Party, the brain drain caused by high-tech engineers being poached by the Chinese Communist Party at high salaries, and the problem of unstable water and electricity supply due to natural disasters. Despite these difficulties, she believes that Taiwan’s core position in semiconductors, coupled with the availability of sufficient R&D technology and expertise, and its compliance with democratic principles in technology governance, are conditions that will prevent Taiwan from being overlooked by the United States, the CCP, or other countries in the high-tech sector.
The Endless Frontier Act, introduced by a cross-party member of the U.S. Congress, passed the Senate Commerce Committee last week, authorizing $100 billion over five years to invest in technologies including artificial intelligence, semiconductors, quantum computing, and advanced communications, and an additional $10 billion to establish a supply chain crisis response program to address issues such as semiconductor chip shortages affecting automobile production.
In response to the bill, which aims to compete with the Chinese Communist Party in the field of science and technology, Chinese Foreign Ministry spokeswoman Hua Chunying said at a regular press conference last week that the Chinese Communist Party “never wants to compete with the United States” and that China would like to see the United States achieve greater development and progress in its own economic development and improvement of people’s livelihood.
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