Taiwan Today

Seen as safeguarding Taiwan’s geopolitical influence, the semiconductor industry is constantly evolving to meet future challenges.

In a darkened theater, the hum of anticipation fades as the first frames of “A Chip Odyssey” illuminate the screen. Directed by Hsiao Chu-chen (蕭菊貞) and filmed over five years, the documentary tracks Taiwan’s decades-long journey to become a semiconductor powerhouse. But the film does more than tell a technical tale: it is a tribute to a country’s determination to defy the odds and overcome marginalization on the global stage to take its place as a critical part of the world’s most advanced supply chains in an industry that has become the linchpin of modern daily life, from vehicles to smartphones to satellites.

“When I started, people thought the topic was too niche,” Hsiao said. Yet the film earned NT$20 million (US$668,000) at the domestic box office in its first six weeks and is poised to maintain good numbers given the global brand recognition of Taiwan’s semiconductor industry, led by titans like Taiwan Semiconductor Manufacturing Co. (TSMC), in a world increasingly dependent on digital infrastructure. The film’s release has coincided with heightened geopolitical tensions, chip shortages and growing awareness of semiconductors as Taiwan’s unique leverage in global affairs.

The film reveals real people in the industry: the engineers, office staff and international research partners. Established by the government in the 1970s, Industrial Technology Research Institute (ITRI) was the incubator of the domestic semiconductor industry. In 1976 it signed an integrated circuit (IC) technology transfer and licensing contract with RCA Corp. and sent a group of 19 personnel abroad for training in IC design, manufacturing, verification processes and equipment. James Chew (邱羅火), one of the team members sent by ITRI, features in the film, sharing recollections of the immense pressure they faced during development. “Failure was not an option,” he said. Just a year later, the first Taiwan IC demonstration factory was completed and launched its first production line.

For Hsiao, the emotional connection with audiences has been rewarding. “It’s rare for the same story to connect with both a retired chip worker and a student who’s never seen a fab,” she said. “When people cry during a scene about photolithography, you realize this isn’t just about industry.” The documentary has garnered positive international reactions, with screening requests from universities, embassies and cultural institutions. The film shows that semiconductors are the result of a deeply human process of trial and error, rather than just scientific industrial development. “The people in this story aren’t just engineers, but risk-takers and bridge-builders,” said Hsiao. Even veterans like Shih Chin-tay (史欽泰), who helped launch Taiwan’s semiconductor research in the 1980s, were moved by the film. “This is the first time I truly felt the gravity and beauty of our journey,” Shih said after the premiere.

For younger audiences, the film offers a glimpse into a legacy often taken for granted. “TSMC is just a name to many people,” Hsiao said. “Now they understand the background and how it arrived at its current position.” As Taiwan faces the fact that its chips may be the deciding factor in international support in the event of an existential threat, reflection on the journey to dominance may supply an example to other nascent industries.

Global Leverage
Amid U.S.-China tech rivalries, the shadow of pandemic-era supply chain chaos and a global artificial intelligence (AI) race, the capability to produce advanced chips is a form of sovereign leverage. Taiwan, producing over 60 percent of the world’s semiconductors and over 90 percent of the most advanced ones, is a key player. “Taiwan’s semiconductor industry has become our strongest geopolitical
bargaining chip,” said Chen Kuo-hsuan (陳國軒), secretary general of the Ministry of Economic Affairs.

Chip diplomacy extends beyond deterrence to integrate economic strategy with foreign policy in order to mitigate geopolitical risks and diversify production footprints. Taiwan has adopted a multipronged strategy to address these challenges by strengthening domestic R&D and industry clusters while expanding overseas. TSMC, for instance, has invested in plants in the U.S., Japan and Europe. Other Taiwan firms are entering markets such as Malaysia, India and Singapore via expansions and joint ventures.

Under the current and previous administrations, Taiwan adopted a forward-looking industrial strategy focusing on five “trusted industries” critical for future growth and national resilience: semiconductors, AI, defense, security and surveillance, and next-generation communications. The policy secures Taiwan’s pivotal role in shifting global supply chains, strengthens its position as a trusted partner among democracies and fosters innovation-driven industries that create high-paying jobs and consolidate national security. Of these five sectors, semiconductors remain the cornerstone. The government is focused on strengthening R&D in IC design, supporting the development of advanced chip manufacturing and packaging, and fostering upstream innovation in materials and equipment. “By institutionalizing economic diplomacy through cross-ministerial coordination and international tech agreements, Taiwan leverages its strengths in AI and semiconductors to champion value-based alliances, securing supply chains and advancing shared technological standards,” said Minister of Foreign Affairs Lin Chia-lung (林佳龍). Alignment between foreign and industrial policy is a deliberate shift from reactive to proactive diplomacy, with semiconductors as the point of entry. “Taiwan has always upheld the principles of political democracy, economic openness and responsibility to the international community, and we anticipate collaboration with more partners in the five trusted industries,” he added.

Supply Strategy
Currently the global chip supply chain faces major threats from geopolitical tensions, natural disasters, material shortages and tech leakage. Reducing reliance on imported raw or semifinished materials is vital to the industry’s security. Taiwan sources over 90 percent of photoresists and specialty gases from Japan and South Korea, a risk exposure made painfully clear during the COVID-19 pandemic and exacerbated by the global chip shortage. “We’ll never be completely self-reliant, but we need to cover strategic thresholds,” Chen said.

While Taiwan firms lead in process technology, they still rely heavily on foreign equipment, prompting a push to localize. Through public-private partnerships, startups and research centers are receiving funding to develop niche etching, cleaning and metrology equipment to replace some of the imports. Another element in shoring up the industry is personnel cultivation, as the semiconductor boom has strained Taiwan’s human resources. Fab expansion plans such as overseas joint ventures, TSMC’s new Kaohsiung site and United Microelectronics Corp.’s R&D scale-ups require thousands of engineers and managers. In response, the government has doubled investment in STEM education, restructured vocational education streams and launched a national semiconductor curriculum in partnership with top universities. The Taiwan Tech Arena’s international chip fellowship attracts doctoral researchers from India, Vietnam and Eastern Europe by offering full scholarships and guaranteed placements.

Maintaining the semiconductor industry’s power to guarantee Taiwan’s continued existence is a delicate balancing act as powerful nations urge Taiwan to de-risk or friend-shore supply chains. Although offshoring wins friends and influences friendly governments, it also risks hollowing out local capacity. The administration’s response is the Roots Remain in Taiwan policy, which supports projects like TSMC’s new plants to produce less advanced products in Arizona, Japan and Europe but requires R&D and high-value processes to remain onshore. In the wake of the 2022 U.S. CHIPS Act and similar legislation in Europe and Japan, Taiwan secured bilateral agreements that protect market access and co-investment opportunities for its leading firms.

Taiwan is championing a global semiconductor alliance and forging deeper ties with democratic partners through bilateral and multilateral cooperation. At the same time, it is driving chip technology into new fields such as smart textiles, space equipment, precision agriculture and biotech. These breakthroughs keep the industry dynamic and solder Taiwan’s role as a force in shaping the future of innovation.

Write to Krakias Kai at kwhuang@mofa.gov.tw