【Bloomberg】The World Is Dangerously Dependent on Taiwan for Semiconductors

As China pushes the world to avoid official dealings with Taiwan, leaders across the globe are realizing just how dependent they’ve become on the island democracy.

Taiwan, which China regards as a province, is being courted for its capacity to make leading-edge computer chips. That’s mostly down to Taiwan Semiconductor Manufacturing Co., the world’s largest foundry and go-to producer of chips for Apple Inc. smartphones, artificial intelligence and high-performance computing.

The industry’s biggest companies are siloed in just a few countries.

“TSMC is becoming more and more dominant,” said Kazumi Nishikawa, an official working on technology issues at Japan’s Economy Ministry. “This is something everybody in the chip industry must find a way to deal with.”

China, in its five-year plan presented in October, is channeling help to the chip industry and other key technologies to the tune of $1.4 trillion through 2025. Yet even that kind of money doesn’t negate the need for Taiwan. Indeed, China has long tapped the island for chip-making talent; two key executives at China’s top chipmaker, Semiconductor Manufacturing International Corp., used to work at TSMC: co-Chief Executive Officer Liang Mong Song and Vice Chairman Chiang Shang-yi.

But with Washington stymieing China’s progress, there is also speculation that Beijing could resort to stealing chip IP, with Taiwan at the heart of those endeavors.

Taiwanese cyber security firm TeamT5 has observed a steady increase in attacks on the island’s chip industry corresponding to the tightening of U.S. export controls on China. While it’s not always possible to know if these are Chinese state actors, “they are all attacking the Taiwanese semiconductor industry,” Shui Lee, a T5 cyber threat analyst, said.

Fellow analyst Linda Kuo said the Taiwanese government was alarmed by a ransomware attack on TSMC in 2018 and had announced plans for some $500 million to help the industry become more aware of cyber security issues.

*Image courtesy of Unsplash