For a first time visitor, the paradoxes rain thick and fast in Taiwan’s monsoon-hit capital. While Taipei 101 – briefly the world’s tallest building – towers over the city, symbolizing Taipei City’s tryst with prosperity, the streets leading up to the iconic building continue to be lined with coin-operated public payphone booths that are still fully functional. One may need less than an hour commute to the south of Taiwan’s capital to get to the Hsinchu, the world’s most important hub for manufacturing the world’s most advanced chips that sits at the heart of every new technology ranging from cellphones to spaceships, but shops in downtown Taipei continues to ooze old-world charm – dutifully listing out landline numbers even the occasional fax number on shopfront hoardings.
Alongside the legion of huge, bright, and neon-lit malls and high-street stores, Taipei’s city center is also home to an almost countless number of old family-run shops proudly selling wares such as incense sticks, decorative lanterns, calligraphy brushes and Custom tailored Western-style suits. And while lawmakers in the country may be infamously linked to spontaneous brawls on the floor of the legislature, the ordinary Taipei residents display an air of serene calm as they go about their daily business in this otherwise crowded, fast-paced metropolis that is now at the heart of a potential flashpoint between the world’s two biggest powers. Other than occasional signboards marking ‘Air Defense Shelters’ that spring up on the streets of downtown Taipei, there is little evidence of this edginess anywhere in the city.
Simmering underneath, though, are signs of political tension, which occasionally vents out in the form of physical slugfest between politicians. Taiwan just got a new president in Lai Ching-te in May, and there is growing concern and apprehension on how the relationship evolves between the newly-elected Lai administration and Taiwan’s highest legislative body – the Legislative Yuan. The executive-legislative dynamic and sharply differing views over lurking reform aiming to tweak the powers of the legislature were at the heart of the latest series of brawls among lawmakers on May 17. For President Lai, the problem is that he is faced with a legislature where his party, the Democratic Progressive Party, lacks a majority, unlike the situation faced by his predecessors Tsai Ing-wen and Ma Ying-jeou. The other two major parties – the Kuomintang (KMT) and the Taiwan People’s Party – have now joined forces, seeking more oversight powers for the Legislative Yuan over the executive.
What has muddied waters further is a recent visit to China by the KMT, the principal opposition party that traces its origin to the Revive China Society founded by Sun Yat-sen in 1894 in Honolulu and which, under Chiang Kai-shek, was the sole ruling party in mainland China from 1928 to 1949 that had to eventually retreat to Taiwan in December 1949 following its defeat in the Chinese Civil War by the Communists. The latest China visit by the KMT lawmakers led by legislative caucus whip Fu Kun-chi in late April drew concerns from several quarters, as a senior executive with a state-owned Taiwanese media organization said. The worries stem from Beijing’s political manoeuvring to control Taiwan’s mainstream political discourse and the visit is being seen as a possible trap by the Chinese Communist Party to undermine Taiwan’s sovereignty.
Many of these concerns of strategic control of Taiwan come down to a tiny device not much bigger than a fingernail. The silicon semiconductor chip, which sits at the heart of every new technology, is a device that Taiwan has an absolute mastery over. Its biggest manufacturer, the Taiwan Semiconductor Manufacturing Company (TSMC), is the ninth-most valuable business in the world and has a virtual stranglehold over the fabrication of high-end chips that even major American tech majors such as Intel, Nvidia or Apple depend on. on. In a sector where Moore’s Law is a constant reality—the idea that the number of transistors on microchips would double every couple of years—the speed of execution is as important as manufacturing precision. TSMC, alongside other Taiwanese companies such as ASE Tech, UMC, Mediatek and PSMC, seem to have perfected this.
It is precisely this aspect of Taiwan’s chip superstardom that makes the country almost irreplaceable – and, thereby, particularly vulnerable. China, which is already being cut off progressively from the most advanced chips, is threatening to take control of the island, triggering concerns over yet another flashpoint in a world where two wars are already raging. Chips manufacturing is incidentally the industry most affected by the progressive split between the US and China, and Taiwan is at the center of this developing cold war.
There is a paradox here too. While the semiconductor industry has been called Taiwan’s “silicon shield”, giving the world a big reason to defend the island if China were to invade, parts of the shield are now moving abroad.
To meet the pressure to be physically closer to its customers, TSMC is now building new fabs in the US, Japan and Germany. Its existing plants are mostly in Taiwan, with some in eastern China. TSMC has, however, just opened its first fab in the Japanese city of Kumamoto and is set to open two $40 billion facilities in Phoenix, Arizona in the coming years to make advanced chips. It has also committed to investing nearly $4 billion to build a fab in Dresden, Germany, the company’s first in Europe.
The chip giant’s move to diversify its production beyond Taiwan has triggered fresh concern among a section of the locals, who worry that the move could eventually diminish the island’s importance as a global semiconductor powerhouse. “There was American pressure to move chip manufacturing back to the US. But it could have repercussions for Taiwan’s security,” a Taipei-based executive, who was earlier part of the KMT, said. This disquiet could only get shriller as China ratchets up its war games.
(The writer’s trip to Taiwan was organized by the Taipei-based Foundation for Excellent Journalism Award)