Why are we so dependent on Taiwan for microchips? Why couldn’t these be manufactured elsewhere, in addition to Taiwan?
In: 1601
In the simplest terms, Taiwan has an incredibly well educated workforce that allows them to compete very effectively in semiconductor manufacturing.
The reasons for this vary, but they include Taiwan’s Government placing a strategic importance on the world’s reliance on their semiconductor exports; as a small island country, they wouldn’t stand much of a chance against their unfriendly neighbour China. China wants Taiwan to be… well, China, not Taiwan, and Taiwan knows this. Taiwan knows that if the world (read: the west, at least for this point) relies on them for chips, which are used in literally everything, the world will then place a strategic importance on Taiwan being independent and sovereign, and not controlled by the CCP. The west does not want to end up in a position where China can have such a powerful ace in their sleeve when it comes to their own economies; Semiconductor manufacturing is **incredibly complex**, very, very advanced, and requires hundreds of **billions** of dollars of investment alongside decades of research to get a domestic manufacturer to the point where they could be competitive to where Taiwan’s manufacturers already are today. If China controlled the world’s chip manufacturing, the west knows they could and likely would use it as leverage to influence the west as they want (alongside the obvious security concerns where defense companies in the US would need systems-on-a-chip manufactured in an adversary nation).
Anyways, if the world relies on Taiwan for chips, Taiwan is better defended from their unfriendly neighbour, as Taiwan knows the world knows that if China takes over their island, a key component in literally everything, every single skilled labor product export is now at risk to being thrown around by China. They’re basically betting that the world will come to their defense if the world needs them for their chips. Because of this, Taiwan’s government actively subsidizes and supports their domestic chip manufacturing industry in many ways (e.g. public education with world leading courses relevant for the semiconductor industry, regulations and policies that make it easier for their manufacturers to operate, etc).
There are many more factors too, but I feel like the strategic importance is likely the most important one.
If you want a significantly more in depth and nuanced explanation, I would highly recommend the Asianometry YouTube Channel / newsletter. He is a Taiwanese local who produces video-essay content, with a focus on Taiwan and Semiconductor manufacturing. This playlist would likely serve a much better explanation than my rambling: https://youtube.com/playlist?list=PLKtxx9TnH76SRC7ZbOu2Nsg5mC72fy-GZ
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