The Biden administration, which has emphasized full competition with China in all areas since taking office, also included a $50 billion investment in semiconductor manufacturing and research and development in the White House’s recently announced $2 trillion infrastructure plan. Semiconductors are an important area of both U.S.-China technology competition, and some experts say the United States also needs to increase cooperation with Taiwan, an industry leader in semiconductors and information and communications technology, in order to put the United States on a more equal footing in competition with China.
“TSMC, the “protector of the nation’s sacred mountain
During a congressional hearing in February, former Google CEO Eric Schmidt pointed out that the United States relies heavily on Taiwan Semiconductor Major Taiwan Semiconductor Corporation (TSMC) for the supply of high-end computer chips. 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 Taiwan government.
Because of the importance of TSMC, which the Taiwanese people call “the sacred mountain of protection,” U.S. officials, members of Congress and industry are concerned about the United States’ over-reliance on TSMC. expressed concern that the United States “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 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 recently about security in the Taiwan Strait, 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 China 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 Chinese control of Taiwan in a conflict in the Taiwan Strait 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 by adopting an “appropriate and decisive policy” toward China that represents the U.S. national interest, which is now 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 mentioned 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 stressed that to overcome the challenges posed by China in the field of technology, the U.S. and Taiwan must strengthen their cooperation to enhance their R&D capabilities and combine their capabilities in hardware and software to win the competition with China, 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 very important to strengthen U.S. R&D and competitiveness This is a very important investment to strengthen 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 China, the brain drain caused by high-tech engineers being poached by China with 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 keep Taiwan from being overlooked by the United States, China or other countries in the high-tech sector.
The Endless Frontier Act, introduced by cross-party members 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 plan to address issues such as semiconductor chip shortages affecting automobile production.
In response to the bill, which aims to compete with China in the field of technology, Chinese Foreign Ministry spokeswoman Hua Chunying said at a regular press conference last week that China “never wants to compete with the United States” and that China is happy to see the United States achieve greater development and progress in its own economic development and livelihood improvement.
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