How Taiwan came to dominate the global chip industry
Taiwan has become a dominant player in the global chip industry, with Taiwan Semiconductor Manufacturing Company producing over 90% of the world's most advanced semiconductor chips. This dominance has transformed Taiwan into a 'niche superpower' with significant global influence, and its semiconductor industry acts as a 'silicon shield' protecting the island from the threat of Chinese invasion.
Taiwan's semiconductor industry is a crucial part of the global economy. The country's dominance in advanced chip production is due to the strategic decisions made by Taiwanese policymakers in the 1970s. They focused on building capabilities in precision manufacturing, which is the most operationally demanding part of the semiconductor value chain. Taiwan Semiconductor Manufacturing Company was established in 1987 and pioneered the 'pure-play foundry' model, manufacturing chips for other firms. This model reassured American and European semiconductor companies that TSMC would not compete with them. The Taiwanese semiconductor industry has grown significantly, with the Hsinchu Science Park hosting over 140 chip manufacturing firms. Taiwan's semiconductor dominance has played a role in protecting the island from the threat of Chinese invasion, with the industry acting as a 'silicon shield'. However, this shield is under threat due to China's efforts to build indigenous capacity in chip manufacturing.
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