How Taiwan Sees the Chip War
The Radiance of Chip Island, presented in English for the first time ever
Lin Hung-wen 林宏文 is Taiwan’s top tech journalist, with decades of experience covering semiconductors, biotechnology, and Taiwanese industrial policy.
His book, The Radiance of the Chip Island: TSMC, Semiconductors, the Chip War, and My 30 Years of Journalism, explores the geopolitics of semiconductors from a uniquely Taiwanese perspective.
We ran an interview in Chinese with Lin on the feed last week (Apple Podcasts, Spotify). An English translation of Lin’s book will be published in early 2025. What follows is a translated transcript of our conversation.
We discuss:
The underexplored story of Taiwan’s industrial policy, from subsistence agriculture and child labor to the rise of TSMC,
The role of the Taiwanese government in facilitating semiconductor development,
TSMC’s management model, including the balance between R&D and manufacturing departments, and talent cultivation strategies,
How TSMC battled international competitors like Samsung and Intel for dominance of the semiconductor industry,
The impact of the AI era on Taiwan’s international relationships,
TSMC’s role in global geopolitics, and the origin of the term “Silicon Shield,”
The differences between Taiwanese and American views of international relations, what these differences mean for Taiwan’s foreign policy.
Hosting today is Arrian Ebrahimi of the Chip Capitols Substack, with cohosting support from ChinaTalk editors Lily Ottinger and Nicholas Welch.
Taiwan’s Industrial Policy History
Arrian Ebrahimi: Mr. Lin, welcome to ChinaTalk. To start, can you explain the main thesis of your book?
Lin Hung-wen: I wrote this book with the main purpose of addressing what I saw as a gap in the existing literature. In 2022, when I started writing, I had read several books related to chips, such as Chris Miller’s Chip War and Yasu Ota’s The Geopolitics of Semiconductors. While these books were well-written and explored the semiconductor industry from different angles, I felt they lacked a perspective from the actual happenings in the semiconductor industry, especially in Taiwan.
Over the past 30 to 40 years, the global semiconductor industry has undergone a dramatic transformation. We’ve seen a paradigm shift from vertical integration to vertical specialization, from IDM (Integrated Device Manufacturer) to fabless and foundry models.
Taiwan seized a significant opportunity in this trend of vertical specialization. Companies like TSMC and UMC rapidly developed in the wafer foundry business. Additionally, Taiwan has numerous IC design houses and has also captured opportunities in packaging and testing markets.
Taiwan has seized the biggest opportunities in the professional specialization roles that emerged from the disaggregation of IDMs. I felt that Taiwan’s experience was crucial — yet other books didn’t mention Taiwan’s development.
How did Taiwan rise? Why can TSMC fabricate over 90% of the world’s advanced processors? Why do Taiwanese packaging houses account for nearly 60% of the global market share?
It seems every country has a version of the CHIPS Act. But subsidizing semiconductors without understanding how Taiwan succeeded is dangerous.
All these countries investing might labor in vain and fail in manufacturing.
Nicholas Welch: Let’s take a step back from current events and discuss TSMC’s history.
I’d like to ask how much of Taiwan’s semiconductor strategy can be attributed to fortunate/lucky economic planning after World War II. For example, consider the influence of Yin Chung-jung 尹仲容, who had a background in industrial engineering. In the 1950s, he established a model where key economic planning was led by industrial engineers rather than professional economists. This laid a good foundation for the Taiwan government to fully support TSMC in the 1980s and justify this approach on national security grounds. However, when Yin Chung-jung was in charge of Taiwan’s economy, semiconductors hadn’t even been invented yet.
Did Taiwan’s industrial policy planners foresee that Taiwan would one day dominate high-tech industries?
Lin Hung-wen: I don’t believe that Yin Chung-jung ever imagined that Taiwan would build the world’s most important foundry business. I’m certain they never considered such a possibility.
When they were promoting industrial development back then, Taiwan was in a very different situation. In the 1950s, after World War II and the relocation of the Nationalist government to Taiwan, the island had virtually no industry. There were only some light industries like textiles.
In fact, Taiwan’s economy in the 1950s was mainly based on home workshops producing items like Christmas lights or umbrellas for the US market.
Taiwan had very weak economic strength, with no heavy industry or electronics industry to speak of. At that time, they likely didn’t understand how important integrated circuits would become. I believe the government officials of that era didn’t have a deep understanding of semiconductors. However, they were willing to trust some experts who had returned to Taiwan. They allowed these people to help, including Morris Chang 張忠謀.
Another important factor was that Taiwan’s technology came from RCA through licensing. RCA was an American semiconductor company that was preparing to exit the industry. Taiwan asked for RCA’s help. Later, Taiwan sent people to learn from RCA. We called them “knowledge-seeking ambassadors” — about 40 to 50 people who brought back RCA’s technology.
Following this, the establishment of Hsinchu Science Park and the Industrial Technology Research Institute (ITRI) were crucial steps. Looking back now, it might seem like they were incredibly farsighted and had grand visions. But in reality, it was just a step-by-step process of improvement.
Now, suddenly, because of the US-China tech war or because of COVID, everyone has realized that TSMC is making all the world’s semiconductors.
Before that, who really cared about TSMC? Globally, I was probably the most dedicated person following TSMC. Not many people paid attention to it because it didn’t have its own products — it was just a foundry.
Lily Ottinger: We’ve been discussing the step-by-step development process, but I’d like to talk about Taiwan’s history and industrial policy strategies in more detail.
After the Nationalists arrived in Taiwan, the government implemented the “Land to the Tiller” 耕者有其田 redistribution program. That facilitated huge gains in agricultural productivity and economic growth, which enabled subsequent generations to go to school and pursue careers outside of subsistence agriculture.
But between land redistribution and the modern day, what specific policies were most crucial for enabling TSMC’s success in manufacturing? In the step-by-step process you mentioned, which steps do you consider most important?
Lin Hung-wen: For TSMC, I think the most important factors were talent, capital, and technology. Regarding talent, as I mentioned earlier, many people brought back technology from RCA training. Taiwan’s education system, especially in science and engineering, is quite strong and practical. People are very diligent and willing to work overtime. These are characteristics of Taiwanese engineers.
When Morris Chang came to Taiwan, he discovered these qualities and believed Taiwan could succeed in contract manufacturing. However, he didn’t think Taiwan would be successful in IC design, which is why he focused only on wafer foundry.
As for technology, we already had the RCA technology transfer. Another crucial factor was the development of the PC industry. Many talented individuals in Taiwan were involved in PC development. Taiwan became a significant producer of PCs, including desktops and laptops, with many companies also producing in mainland China. This created opportunities, as PCs required semiconductors. The PC industry became a crucial carrier for Taiwan’s semiconductor industry, providing an outlet for many chips used in PCs.
Regarding capital, Taiwan’s private sector resources have always been quite strong. There was a period when a lot of Taiwanese investment went to mainland China, so capital and talent flowed there. However, in recent years, capital has been flowing back to Taiwan, so funding has generally been abundant.
Arrian Ebrahimi: I have a question about the role of the government. You’ve previously discussed the different roles of the Legislative Yuan (the law-making branch of the Taiwanese government) and institutions like Academia Sinica. Can you explain the significance of these institutions to overseas readers?
Lin Hung-wen: The Taiwanese government did quite a lot in terms of industrial infrastructure. The Legislative Yuan’s crucial contribution was creating the Industrial Technology Research Institute (ITRI). The technology licensing from RCA was all done through ITRI. ITRI is a government-led research institution, but it’s not like many advanced research institutions in the US — Taiwan’s ITRI focuses more on commercializing technology.
ITRI was also involved in PC and communications technology, which were important areas, but semiconductors were perhaps their most significant contribution. The people we sent to RCA to learn came back and initially worked at ITRI. They started with 3-inch and 4-inch wafers (now we’re at 12-inch). A key point is that they established a commercial production line at ITRI. This wasn’t just in a lab — it was capable of mass production.
ITRI played an important role in Taiwan’s ability to seize opportunities in the global semiconductor vertical division of labor. We know that companies like UMC and TSMC all spun off from ITRI. So the predecessors of these companies, their teams, and their talent — ITRI played a crucial role in all of this.
Many countries around the world are now looking to learn from ITRI about how they did this back then. ITRI was a very important starting point. The science park that came later was another crucial element. The science park housed companies like UMC and TSMC — essentially providing a single window for the government, allowing businesses to achieve scale and accelerate production.
Government regulations also favored these companies in terms of exports.
Arrian Ebrahimi: You used the word “predecessor” very aptly, and I asked this question to emphasize that the Taiwanese government has been supporting its industry all along.
I remember Morris Chang complaining in an interview with Chris Miller that Chip War overemphasized the role of the Taiwanese government, saying they didn’t help him that much. But when you look at the talent and basic technology contributions from Academia Sinica and especially ITRI, the Taiwanese government’s support was really substantial.
Now, let’s start talking about some topics internal to TSMC, especially the different roles of their R&D department and engineering. Which aspect of the company do TSMC’s leaders value more — technological development or operational perspective? To ask a more specific question, would TSMC CEO C.C. Wei 魏哲家 be more excited about the R&D department’s contribution to the next generation of nanometer process invention, or about a 1% efficiency improvement announced by various factories? Which news would the president of TSMC be more eager to hear?
Lin Hung-wen: In my opinion, both are extremely important, but their importance varies at different times. In the early days, when TSMC’s technology wasn’t leading, they focused more on catching up technologically. When TSMC was founded, its technology lagged behind the world’s most advanced by about three to four generations. Now, of course, it far surpasses others.
TSMC’s technology leadership is crucial and ongoing. Today, we see TSMC as very powerful because its technology far exceeds that of its competitors. But you need to understand that TSMC’s technology was once behind. It wasn’t until around 2000 or 2001, at the 0.13 micron (130 nm) node, that they successfully developed their technology and started to show signs of leadership. Even then, they weren’t fully ahead.
It wasn’t until 2009, when Morris Chang returned as CEO, that they aggressively invested in 28nm technology and slowly surpassed others. Now, at 7nm, 5nm, and 3nm, they are leading. So from start to finish, technological leadership has always been extremely important.
However, the efficiency improvement you mentioned is something TSMC has always paid close attention to. In addition to technological leadership, operational excellence is crucial in wafer foundry. Good yield, short cycle time, and low cost all directly affect profitability. TSMC places great emphasis on efficiency improvements. They work on this every day, and all their engineers work overtime for this purpose.
So both aspects you mentioned are very important. Mr. C.C Wei now needs to focus on both. Technology must continue to lead for TSMC to maintain its high profitability and create high value for customers. Without technological leadership, it wouldn’t work because others are always catching up.
However, there’s another aspect that’s even more important than these two: customer-service satisfaction. From beginning to end, TSMC has always prioritized serving customers and maintaining high satisfaction. It’s not just about leading in technology or improving efficiency.
For example, if you look at TSMC’s competitors like Intel and Samsung: Intel had leading technology early on, but the problem is that Intel has its own products. Samsung also has its own products. When you have leading technology, do you use it for customers or for yourself? Honestly, this creates a conflict. In Samsung’s case, when they have leading technology, they might use it for their own products first and not give it to customers because they want their own products to be good.
So technological leadership isn’t actually the most crucial thing for a company like TSMC. The most important thing for TSMC is customer service and satisfaction. If customer service is good, then technological leadership and efficiency improvements are all for the benefit of customers.
TSMC has over 30 important customers, and these customers often change their product plans. Sometimes they urgently need something and ask TSMC to quickly adjust production to deliver goods earlier. So TSMC has to change its factory production process from top to bottom. Therefore, efficiency improvements are ultimately about serving customers.
I know Mr. C.C. Wei now arrives at the company at 4:30 a.m. every morning. Why? To serve customers. He can call and talk with European and American customers at that time to understand their needs. Serving customers is the key to TSMC’s success.
Arrian Ebrahimi: Mr. Lin, you’re mainly saying that R&D and efficient factories have made different contributions at different historical moments. At some points, one aspect may have played a more important role, while at other times, both were equally important.
But may I ask, why are most of TSMC’s leaders trained in factory management rather than coming from the R&D department?
This relates to another question: since management and R&D play different roles — and the importance and strategic value of these two departments vary at different times — why did Morris Chang want his successors to take turns leading different departments? It seems that most of them initially came from engineering, but later Chang decided to let them experience every department. Can you explain a bit about this internal management approach?
Lin Hung-wen: Yes — you’re referring to when he had Mark Liu 劉德音, C.C. Wei, and Chiang Shang-yi 蔣尚義 rotate through R&D, business, and wafer-fab management. I think this was basically Morris Chang’s way of ensuring that a CEO would be very familiar with all three departments. So he had them rotate through different positions to gain different experiences.
It was also a way for Morris to test them. Being a CEO isn’t just about ability — it’s also about how one handles different challenges. How do they react when faced with tests? Do they panic or handle situations calmly? I think this was all part of the testing process.
He used this method to let each of them hone their experience and mature their ability to handle situations and face challenges. So I think it’s natural to have successors experience different departments. This is an important process.
Arrian Ebrahimi: Although Morris Chang is retired, it feels like his shadow is still there, right? I’ve heard that some people still call him “Grandpa.” Does this role actually exist, or is it just something people discuss?
Lin Hung-wen: I think calling him “Grandpa Chang” is quite natural because he’s in his 90s now, so he could be everyone’s grandpa. I believe he’s still a spiritual leader. Although he’s no longer working in an official capacity, I believe he still has a lot of influence. I’m sure he still provides guidance to younger generations, though he probably doesn’t initiate it. But I imagine many people still seek his advice.
For instance, I think C.C. Wei might consult him if there are important matters. So I believe his influence is still there. Even now, I know that many US congressmen, senators, and state governors who visit Taiwan always hope to meet with him and hear his opinions. I think this is quite natural.
Arrian Ebrahimi: That’s a kind of filial piety, which is good.
Formidable Competition and TSMC’s AI Future
Arrian Ebrahimi: Let’s discuss TSMC’s battle with Samsung more specifically. Your book highlights this quote from TSMC founder Morris Chang: “Samsung is a formidable but not admirable competitor” 三星可畏，但不是可敬的對手.
What did Morris Chang mean by this?
Lin Hung-wen: Morris Chang said this in a very specific context. A reporter was asking him a question about TSMC’s competition with Samsung, and before the reporter could finish, Morris interrupted and said, “I didn’t say they were admirable, I said they were formidable.” He emphasized the word “formidable” several times in English.
Morris has never explained why Samsung is not admirable — he wasn’t emphasizing that part. But he did stress that they are formidable. In Morris Chang’s words, Samsung is like a 700-lb gorilla. Intel used to be a gorilla too, but they’re struggling now.
The key point is that Samsung became number one in many fields they’ve entered — whether it’s memory, phones, or TVs and displays in the past.
As for their competitive methods ... well, I understand this because I wrote a book about Samsung in 2012, describing them as a “financial crocodile.” I wrote that book because, at that time, Samsung was beating many Taiwanese industries badly. Taiwan’s position was miserable (辛苦), Taiwan’s flat-panel display industry was suffering, as were many other industries — all beaten by Samsung.
I understand why Morris Chang calls Samsung formidable. He’s never criticized Samsung, but he once shared an experience. Very early on, when he returned to Taiwan and was still at ITRI, before founding TSMC, he was invited by Lee Kun-hee, the previous chairman of Samsung (the father of Lee Jae-yong), to visit Korea. He went with Stan Shih 施振榮, the founder of Acer, and some others from ITRI. Lee Kun-hee showed them Samsung’s DRAM investments and essentially said, “Don’t invest yourselves — just come work for me.”
Morris, of course, didn’t give an answer. He felt he could do better by returning to Taiwan, and he wanted to start his own company, not work for Samsung. When he talks about this incident with Samsung and Lee Kun-hee, I think he’s clear that he believed he had the ability and ambition to build a company that could compete with Samsung.
Everyone knows that before returning to Taiwan, Morris was already the general manager of the semiconductor business at Texas Instruments. He was a very important leader in that company. So I think he had high expectations for himself. Of course, when he first founded TSMC, it was tough, but his goal was to build a very important company with great influence. This is my understanding of his comments about Samsung.
Arrian Ebrahimi: You recently published an article titled, “The AI Era Drives Reorganization of the Semiconductor Landscape! TSMC chose to cooperate with SK Hynix, causing Samsung to lose everything.”
Could you please explain how AI chips are affecting the memory industry and Samsung’s leading role? What impact have they already had?
Lin Hung-wen: Thank you for this question. It’s a very good topic, especially as SEMICON is currently being held in Taiwan.
The impact of AI is very dramatic. Everyone sees NVIDIA taking off because of the AI era, with its stock price soaring, but there are many stories behind this.
This year’s Taiwan semiconductor conference is very interesting. Samsung and SK Hynix have sent their most important people to Taiwan. In the past, Samsung and Hynix would send some people to attend Taiwan’s semiconductor exhibition, but never their top executives. This time, they all came. Why? Well, here’s some other interesting information: in the first half of 2024, Korea’s semiconductor exports to Taiwan increased by more than double.
What does this mean? The AI server chips, as we know, have NVIDIA as the most important customer, and TSMC helps with the manufacturing. Because these AI chips need to be power-efficient, high-performance, and well-packaged, they now package logic ICs (SoC) and HBM together. That’s why Korea’s memory exports to Taiwan have grown so much — NVIDIA needs these AI server products, and they need to package GPUs and HBM together. We call this CoWoS (Chip on Wafer on Substrate) technology.
In the past, system memory and logic chips were separate and could be shipped separately. But now, because TSMC controls the most advanced process technologies and NVIDIA places all its orders with TSMC, the HBM memory must be packaged together.
This has produced a very significant effect. Yesterday, I heard executives from Samsung and Hynix speak. One Hynix executive said he had already been to Taiwan more than a dozen times this year. They need to constantly discuss with TSMC how to package HBM together through CoWoS packaging. There are many areas where they need to collaborate.
As for Samsung, because TSMC and Samsung are competitors in wafer foundry, TSMC tends to support Hynix and Micron, the other two memory manufacturers. Samsung, of course, tends to be excluded. This can’t be helped — it’s the reality of competition.
Taiwan’s Startup Ecosystem and TSMC for Biotech
Lily Ottinger: Mr. Lin also writes articles covering biotechnology. The Taiwanese government has launched a state-owned biotechnology company called TBMC, which sounds like the biotechnology version of TSMC.
I’d like to ask, what are the differences between foundry manufacturing for integrated circuits and foundry manufacturing for biotechnology? What technical challenges might TBMC face?
Lin Hung-wen: Thank you for reading my articles so carefully. You’re right, I did write about TBMC and TSMC. When TBMC was being funded, they explicitly stated they wanted to emulate TSMC’s model, including partnering with the American Resilience Group. Resilience holds a 27.5% stake, which is the same percentage that Philips held in TSMC initially. They hope to create a successful model for biotechnology manufacturing in Taiwan, similar to what TSMC did for semiconductors.
However, I believe there are significant differences between these two industries. Biotech production processes are less complex, with about 30 steps, while semiconductor manufacturing involves around 1,500 steps. This difference in production complexity results in different entry barriers. Biotech manufacturing is relatively easier to enter, while high-end semiconductor manufacturing, especially for advanced processes, is much more difficult, leading to fewer competitors.
The investment amounts also differ greatly. A 12-inch semiconductor fab now requires at least US$10 billion in investment, which is over NT$300 billion. Many biological factories, on the other hand, only require NT$1 to 3 billion in investment. This hundredfold difference in investment further highlights the higher entry barrier for semiconductors.
Lastly, the products and cost structures of these industries are very different. For example, the production cost of Viagra accounts for only 0.7% of its price. If you reduce manufacturing costs by half, it only decreases the overall cost by 0.35%, which has a minimal impact. In contrast, semiconductor costs account for a much larger portion of the final product price. When TSMC uses the best technology to produce NVIDIA’s GPUs, the cost reduction is substantial.
IC functionality is also very powerful and continuously improves while prices decrease due to Moore’s Law. A single smartphone chip now uses 16 billion transistors, which is more than twice the world’s population. Pharmaceuticals, however, tend to become more expensive over time because they save lives, and the demand for healthcare is inelastic.
These fundamental differences between the two industries mean that TBMC faces many challenges, and its future success is uncertain.
Arrian Ebrahimi: Thank you, Mr. Lin. You mentioned the entry barriers, which leads me to my next topic — TSMC’s support for Taiwan’s startup ecosystem.
As someone who grew up in the western United States, I’ve seen my high school classmates jump from company to company, gaining industry knowledge until they create their own startups, which may fail, leading them to join large companies before trying again.
How would you compare Taiwan’s and America’s startup cultures, especially regarding job-hopping?
Lin Hung-wen: Taiwan’s situation is more similar to Silicon Valley. Job-hopping is very common in Taiwan because our industrial structure is dominated by small- and medium-sized enterprises (SMEs). Taiwan has 1.5 million SMEs, of which 1.4 million have fewer than 5 employees. This is quite different from Japan and Korea, where large conglomerates dominate and people often work for one company their entire lives.
The key difference is that Taiwan has a strong entrepreneurial spirit. In SMEs, people often have ownership stakes, making them more willing to work hard because they’re working for themselves. This entrepreneurial spirit is similar to Silicon Valley.
However, the form of entrepreneurship in Taiwan differs from Silicon Valley. Taiwan specializes in professional manufacturing within the global supply chain. Many Taiwanese companies do contract manufacturing for large American companies like Google, Amazon, and Facebook. Taiwan has seized opportunities in industrial specialization.
For 30 years, the most common news in Taiwan’s tech industry has been about “concept stocks” related to companies like Apple, Tesla, HP, and Dell. We focus on which Taiwanese companies are doing contract manufacturing or supplying components for these global brands. This structure of specialization continues today with companies like NVIDIA.
Arrian Ebrahimi: Mr. Lin, you’ve mentioned that Taiwan’s small companies are often supporting American big companies. Is it true that Taiwan’s startups are mostly in the chip industry, revolving around TSMC? Is their only goal to provide inputs and technology that TSMC needs?
Lin Hung-wen: That’s not entirely accurate. Taiwan doesn’t just have semiconductor companies. We have a significant PC industry with companies like Foxconn, Quanta, Compal, and others. We also have companies in various related fields, such as Largan Precision, which makes lenses for iPhone cameras, and many companies in networking and communications.
Taiwan also has a large industrial computer sector. While it’s true that many companies support TSMC, providing equipment, materials, and components that TSMC doesn’t develop in-house, this is just one part of Taiwan’s diverse tech ecosystem.
For example, with the rise of AI servers, heat dissipation has become crucial. Many Taiwanese companies are developing solutions for this challenge. So, Taiwan’s startups cover a wide range of technologies and industries, not just semiconductors.
International Isolation: The Chip on Taiwan’s Shoulder
Arrian Ebrahimi: I’d like to ask a potentially sensitive question: which is more important, TSMC or the Taiwanese government?
Lin Hung-wen: That’s a profound question that kept me up last night. It touches on a crucial point for Taiwanese people. Before 2018, when the US-China conflict intensified, the world didn’t pay much attention to Taiwan. Many Western observers were focused on China’s rapid growth over the past 30 years.
Both the Taiwanese government and TSMC are extremely important. The Taiwanese government represents our democratic system, chosen by the people’s votes. It embodies the direction we’ve chosen for ourselves after years of struggle.
TSMC is also crucial. It’s unprecedented for a Taiwanese company to reach such technological heights and play such a vital role in global chip production. For a small island of 23 million people to produce a company that influences the entire world and ranks among the top 10 globally by market value is a great source of pride for Taiwan.
Arrian Ebrahimi: This year, TSMC has accepted invitations from many countries to expand production abroad. It seems that the United States, Germany, and Japan are all grateful for TSMC’s cooperation. How should Taiwan seize this opportunity to enhance its international status?
Lin Hung-wen: I often give lectures in Japan, and I always say that I’m able to publish books thanks to TSMC’s success. Because TSMC is so successful, everyone pays attention to it, and the books I write sell well because everyone wants to read about it. But more importantly, I think Taiwan as a whole should capitalize on TSMC’s success.
People are thinking about how TSMC is now investing in the US, Japan, and Germany. In the past, many Taiwanese businesses invested in mainland China or Southeast Asia. We called it “westward expansion” or “southward expansion.” But those expansions were aimed at lowering costs, taking advantage of better production conditions in those places to earn excess profits.
Now, investing in the US, Japan, and Germany is fundamentally different because the costs in these places are much higher than in Taiwan. In the US, it’s several times higher. TSMC employees sent to Arizona have their salaries doubled, and they’re still paid less than American workers. It’s the same in Germany.
Now, Taiwan isn’t just trying to make money by lowering costs — we’re trying to create value, which is much more difficult. I think Taiwan needs to handle this well. If TSMC can successfully produce in the US, Japan, and Germany, if these factories can operate smoothly, it will involve different corporate cultures. As I mentioned, Taiwanese people are more dedicated to work and willing to work overtime, but American and German employees probably aren’t as willing to work overtime. Even Japanese people aren’t as willing to work overtime now.
There are also language barriers. To be honest, our English isn’t that good. It’s not our mother tongue, so when we go to Japan or the US, there are challenges in communicating with local employees. We see all these challenges.
But regardless, I think the Taiwanese government should use this opportunity to help more people understand Taiwan and its situation.
Taiwan still doesn’t have international status. We can’t even join the United Nations. We don’t have official diplomatic ties with most countries, and our representatives often have to meet foreign officials unofficially to avoid protests from China.
When we participate in the Olympics, we’re called “Chinese Taipei.” We can’t even use the name “Taiwan” without facing suppression.
Taiwan has been on the periphery of the world, just trying to survive.
I think this is a feeling many Taiwanese have in their hearts. It’s hard for us to assert anything because as soon as we do, fighter jets fly over and missiles are pointed at us. Even big brothers like the US tell us what to do. Taiwan is basically a little brother, and our international status is very low, almost non-existent.
But we can only expand our influence through economics and technology. We can make more investments and seize important opportunities in the global industrial division of labor. This is what everyone in Taiwan is working on now.
Nicholas Welch: Do average Taiwanese citizens actually use the term “Silicon Shield” (矽盾)?
Lin Hung-wen: Most Taiwanese people agree that TSMC is indeed a “nation-guarding sacred mountain” 護國神山. TSMC has reached unprecedented heights for a Taiwanese company, leading in technology and playing a crucial role in global chip production. With a market value among the world’s top 10, it’s a source of great pride for Taiwan, a country of just 23 million people, to have produced a company with such global influence.
The term “Silicon Shield” wasn’t invented by Taiwanese people — it originated from foreign media. Since the intensification of US-China tensions in 2018, this concept has gained significance. People realize that TSMC’s production of chips for major global companies in Taiwan means that war cannot occur casually here. A conflict would disrupt the entire global electronics industry, affecting not only economic but also national security, as chips are crucial for missiles, fighter jets, drones, and other security applications.
While average Taiwanese may not discuss the term “Silicon Shield” explicitly, the sentiment behind it is widely understood. Taiwan harbors no hostility towards anyone. We lack international status, so we strive to contribute positively to everyone’s success through our efforts. Our chips enable companies like Apple and NVIDIA to sell more products globally, helping their businesses grow and flourish.
Taiwan primarily focuses on contract manufacturing, with few of our own products. Our industry’s core is built on mutually beneficial partnerships. Taiwan isn’t aggressive; even our fighter jets are primarily for deterrence. In conclusion, while the average person may not deeply contemplate the “Silicon Shield” concept, using semiconductors for self-protection is a common perspective currently.
A Taiwanese View of Geopolitics
Arrian Ebrahimi: Mr. Lin, you’ve just explained the Taiwanese mindset. Now, I’d like to compare the perspectives of different nationalities on international relations, particularly Taiwanese and Americans.
After spending a summer in Taiwan, my observation is that average Taiwanese people seem to care mostly about foreign trends that directly impact Taiwan’s internal development.
In contrast, Americans tend to perceive certain countries as threats to national security, engaging in unfair trade practices, or exhibiting undemocratic behavior. It appears Taiwanese people focus primarily on their island, while Americans consider the entire world order. What do you think of this view, and how does Taiwan’s worldview influence its international strategy?
Lin Hung-wen: Your perception is understandable and natural. I largely agree with your observations, but it’s important to understand the underlying reasons. As I mentioned earlier, Taiwan has been continually suppressed and lacks international status. We have diplomatic relations with only a handful of small countries in Central and South America and Africa.
Taiwan has been on the world’s periphery, while the US is at its center. This fundamental difference in position shapes our respective worldviews.
In Taiwan, our primary concern has been survival. We focus on how others’ actions might impact us and how we can address the resulting challenges. The US, being at the world’s center, naturally considers global issues and seeks to maintain world order, sometimes intervening when situations don’t align with its interests.
Your perspective is valid because we come from different backgrounds, cultures, and living conditions. Israelis would likely offer a different viewpoint, as would the Japanese, despite our shared Asian heritage and strong work ethic.
Taiwan has transitioned from being a completely overlooked peripheral nation to becoming the center of the global semiconductor industry, which has surprised many. I often use the analogy of stagehands in theater — Taiwan used to be like the black-clad stagehands who move props unseen, working behind the scenes while companies like Apple and NVIDIA took center stage. Now, these “stagehands” have become crucial players.
Taiwan’s fundamental role hasn’t changed; we’re still primarily engaged in contract manufacturing and production within the global supply chain. What has changed is the critical importance of our role. While global trends have shifted, Taiwan continues to perform its core functions, albeit now in a more pivotal capacity.
Lin’s Background and Vintage Tech Journalism
Arrian Ebrahimi: Let’s close with a discussion of your background. How did your career as a journalist impact the way you wrote the book?
Lin Hung-wen: This is my 31st year covering the semiconductor industry as a news reporter in Taiwan. I started reporting on semiconductors in 1993, and TSMC was established in 1987, so I began following this company shortly after its founding, writing daily news about it.
I’ve also written extensively about the semiconductor industry outside of Taiwan. Over the past three decades, I’ve traveled all over — to the United States, Japan, and Europe. I even went to Scotland three times, back when it was known as Europe’s “Silicon Glen.”
My book was published in Taiwan in July 2023 and in Japan in April 2024. I’ve already been to Japan four times since the Japanese publication, as they’re very keen to understand Taiwan’s success story. I’ve had many exchanges with Japanese friends.
The Korean version will be published by the end of this year, and the English version will be out in the first half of next year. I hope to let everyone know that Taiwan’s development experience is very worthy of reference.
Of course, Taiwan has also had failed cases, and I don’t shy away from discussing these. For instance, Morris Chang was very successful at TSMC, but his first ventures were quite disastrous, and he later had to close down those operations. As a frontline reporter, I don’t conceal facts, but I strive to present Taiwan’s development experience fairly and objectively.
Arrian Ebrahimi: Thank you, Mr. Lin. You mentioned earlier that you’ll be releasing Korean, Japanese, and English versions of the book. What new aspects will you cover in the English version? How will you tailor the content for new audiences?
Lin Hung-wen: For the English version, I’ve added more current content. I’ve added a lot of new developments, including how AI is driving changes in the semiconductor industry, and the integration of SOC (System on Chip) and HBM (High Bandwidth Memory). These developments have had a significant impact on the industry.
I’ll also include more topics that English readers in America and Europe are interested in. For instance, TSMC is now starting to build a plant in Germany, so I’ll include some European developments as well.
Arrian Ebrahimi: I’m still curious about you personally. You mentioned that you started as a journalist around the same time TSMC was founded, not long after. Since you studied at National Chiao Tung University 國立交通大學 for your undergraduate degree, journalism probably wasn’t the most likely career path for you, right? I’ve lived in Hsinchu, and most people there dream of becoming engineers. Why did you want to become a journalist?
Lin Hung-wen: National Chiao Tung University should be familiar to many friends in Taiwan and mainland China. Essentially, Taiwan’s Chiao Tung University was re-established in Taiwan after the separation of the two sides of the strait, originating from the Chiao Tung University in mainland China.
Chiao Tung University is one of the top institutions for science and engineering. After studying there for four years, I realized I might not be suited to be an engineer. So after graduation, I became a journalist. I chose journalism because I enjoyed writing.
After becoming a journalist, I found it quite suitable for me. On one hand, I enjoy writing, and it’s a great pleasure for me. I often get to talk with many people and meet industry leaders. Standing on the shoulders of giants, I can see far.
Another important factor is that with my science and engineering background, I found it easier to cover this industry compared to journalism graduates who might face more obstacles. As I mentioned earlier, through my news coverage, I’ve gained many insights. Covering an industry isn’t just about writing industry news; I’ve seen a lot of competition between countries, economic and industrial development, and now geopolitical developments.
Through this industry, I’ve gained knowledge in many other areas. This exploration has been very interesting to me. Every day, I wake up with a pile of things to understand, analyze, and explore. I find this to be a very happy journey of exploration in my life.
Arrian Ebrahimi: You mentioned that you’ve been a journalist for over 30 years, and this book is based on your interviews and reports over these years. Before discussing the process of writing this book, could you first tell us how you entered the chip industry and became a specialized journalist in this field? Then, how did you summarize your 30 years of experience into one book?
Lin Hung-wen: When I started covering the semiconductor industry, it was my supervisor at the newspaper who assigned me to it because there was a vacancy. They thought that with my background at Chiao Tung University, I could quickly take on the role.
As you know, Taiwan’s semiconductor development started in Hsinchu Science Park. At that time, I would go to Hsinchu every day, visiting different companies and chatting with people.
Every day, I would compile tables, listing the products, investment amounts, and other details of many Taiwanese companies. I was so young at the newspaper that they called me “Table Brother” — the brother who was good at making tables.
In this learning process, I began to find the chip industry very interesting. Now, everyone knows how important chips are. They’re in your phone, your computer, or anything connected to the internet. But in the early days, it wasn’t necessarily like that. When I first started reporting, it was mostly about consumer ICs, like those found in toys.
Young people might not know this, but we used to have musical greeting cards for Christmas. When you opened them, there would be a music IC that would play a tune. Taiwan used to make many of these audio ICs. Then, as telephones (not mobile phones, but desktop phones) started to develop, Taiwan slowly moved from these small consumer ICs into PCs.
Now we’ve entered the AI era with GPUs. I feel that over these 30 years, I’ve grown alongside the semiconductor industry. I started knowing nothing and gradually came into contact with many aspects of the industry’s development.
Many Taiwanese companies have gone through this process. As I mentioned, there have been several generations of different ICs. Taiwan has been slowly capturing these opportunities. Not all companies in Taiwan have successfully transformed, but some have. For example, MediaTek initially made ICs for PC-related optical drives, but when smartphones took off, they seized the opportunity.
The English version of Lin Hung-wen’s book, (working English title — Chip Island: How TSMC and Taiwan Triumph) will be published in early 2025. We highly recommend you check it out!
Lin’s song of choice:
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"Looking back now, it might seem like they were incredibly farsighted and had grand visions. But in reality, it was just a step-by-step process of improvement."
Great article, thank you. Very interesting. So, it was RCA who first started the out sourcing back in then 70's in electronics. When we started shipping out our manufacturing base in this area and most others. Crazy? As Taiwan has shown here and it keeps showing up, do not let economists run or dictate your policy or processes. Taiwan smartly let their engineers run the show. We did the opposite and started listening to economists. Economists think they are in a science! ha lol right! They are in political economy/ sociology. They are not scientists and i wish they would stop acting like they are. Again, great article very informative thank you.