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By Uma Chinnannan
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As a global leader in semiconductor manufacturing, Taiwan stands at the forefront of complex geopolitical dynamics. Its position as a critical hub for semiconductor production places it in a unique yet increasingly vulnerable situation, exposed to heightened risks from regional instability, trade tensions and supply chain disruptions.
After decades of globalization and relative stability, the world has reached a critical turning point. Rising geopolitical tensions and shifting supply chains have raised challenging questions for policymakers and corporate leaders about safeguarding technologies, markets and supply chains vital to economic and national security. Addressing these challenges requires innovative strategies to build resilient supply chains that can adapt to the evolving global landscape, particularly in the semiconductor sector, which underpins a vast array of current and emerging technologies.
Taiwan’s central role in the global semiconductor ecosystem, with Taiwan Semiconductor Manufacturing Co accounting for a significant share of advanced chip production, underscores its importance, but also exposes vulnerabilities such as overreliance on a single location, regional instability and escalating trade frictions.
The rise of Beijing’s “Made in China 2025” initiative has intensified geopolitical tensions, with concerns over fair competition, technological decoupling and the weaponization of supply chains. For instance, during a territorial dispute with Japan in 2010, China restricted the export of rare earth elements that are vital for high-tech industries, showcasing its ability to use supply chains as a geopolitical tool.
Similarly, the US imposed export controls on semiconductor technologies during the trade war in the late 2010s, limiting China’s access to critical components and accelerating global supply chain diversification. These examples underscore how supply chains have long been leveraged as strategic instruments in global power struggles.
For Taiwan, maintaining its strategic position while addressing global reliance on its semiconductor industry and building resilient supply chains remains a critical challenge. The ongoing US-China trade friction adds further complexity, as Taiwanese companies navigate the competing demands of two major markets.
Taiwan’s geopolitical position intensifies these challenges, given its proximity to China and its vital role in global supply chains. This makes it a potential flashpoint for regional tensions. Any escalation in the Taiwan Strait could severely disrupt semiconductor exports, causing widespread ripple effects across the global economy.
Furthermore, Taiwan must prepare for potential shifts in US policies under US President Donald Trump’s administration, such as the imposition of tariffs or demands for increased defense spending, which could further strain its economy and strategic positioning.
Amid these pressures, collaborative initiatives such as the US-India Initiative on Critical and Emerging Technology, launched in 2022, provide significant opportunities for India’s growth in the global semiconductor supply chain. India is enhancing its capabilities in chip design, manufacturing and critical materials — areas where Taiwan’s expertise and leadership can play a transformative role. By collaborating with Taiwan, India can accelerate its readiness to support the global semiconductor ecosystem, while Taiwan can diversify its supply chain partnerships and reduce dependence on traditional markets. This partnership would be mutually beneficial, fostering resilience and innovation for both countries.
Global efforts to secure critical materials are also gaining momentum. The US-led Mineral Security Partnership, launched in 2022, has brought together 14 nations and the EU to bolster supply chains for essential resources like rare earth elements, cobalt and lithium — key inputs for semiconductor production and clean energy technologies. Similarly, the Regional Comprehensive Economic Partnership, which came into effect in January 2022, has facilitated deeper trade integration across Southeast Asia, creating opportunities for collaboration on raw material exports and technological advancements.
Taiwan’s engagement with Southeast Asian nations such as Vietnam, Malaysia and Indonesia are vital in this context. These countries are scaling up exports of essential raw materials needed for semiconductor manufacturing, making them valuable partners in diversifying supply chains. For example, Vietnam has become a significant exporter of rare earth elements, while Malaysia plays a central role in electronics processing and assembly. By fostering stronger partnerships with these nations, Taiwan can mitigate risks tied to overreliance on a single supplier or market.
Additionally, trilateral cooperation among the US, Japan and South Korea on semiconductor supply chains and advanced technologies, such as quantum computing, offers Taiwan a broader network of allies in the tech ecosystem. Collaborating with these nations can help Taiwan reinforce its leadership in the semiconductor industry while bolstering its resilience against geopolitical uncertainties.
As an island nation with limited energy resources, Taiwan is also vulnerable to disruptions in energy supplies. Further escalation in the Taiwan Strait could exacerbate these vulnerabilities, significantly impacting its economy. Addressing such risks requires Taiwan to invest in sustainable infrastructure, recalibrate its supply chains and deepen its ties with Quad nations (Australia, India, Japan and the US), as well as European and ASEAN countries. By doing so, Taiwan can effectively mitigate these risks and strengthen its position in the global landscape.
Taiwan’s significance extends far beyond semiconductors; it is a linchpin for global trade security, democratic values and international norms. Its ability to withstand assertive tactics in the Taiwan Strait will serve as a benchmark for democracies worldwide. By fostering alliances and reinforcing its strategic importance, Taiwan can navigate these challenges and cement its role as a vital player in the evolving global landscape.
Uma Chinnannan is a doctoral candidate in the international doctoral program in Asia-Pacific Studies at National Chengchi University. She is also a recipient of the Ministry of Education Taiwan Scholarship.
