Chapter 2 | A National Treasure: An Immovable Mountain, or a Jade Whose Possession Invites Disaster?
If the global chip industry has manufacturing nodes that are exceptionally difficult to bypass, TSMC is certainly among them.—The argument of this essay
On the map of the twenty-first-century global economy, TSMC is more than a company. It is a pillar of Taiwan's economy, a lifeline of the global technology industry, and a central asset in geopolitical competition. In recent years, the phrase “sacred mountain protecting the nation” has transcended economics to become a symbol of collective reassurance in Taiwan. But amid global turmoil and intensifying technological rivalry, is this mountain an impregnable shield, or a treasure destined to be contested?
An old saying warns that possessing a precious jade can itself invite disaster. TSMC's value has placed it at the center of global technological competition—and made it Taiwan's most dangerous bargaining chip. Is it an unshakable mountain, or a jewel that will eventually be taken away?
An Entrepreneurial Legend: The Rise of TSMC
Chiang Ching-kuo's Industrial Strategy
Taiwan's politicians like to bask in TSMC's reflected glory. The Democratic Progressive Party government has even presented it as part of its record of achievement, as though the company's success arose from its governance. Yet TSMC's creation was not an achievement of DPP rule. It emerged from the industrial strategy of the Chiang Ching-kuo era.
Taiwan's semiconductor strategy predates the 1980s. The Industrial Technology Research Institute was established in 1973. In 1976, it signed a technology-transfer agreement with RCA in the United States and sent personnel for training. This accumulation of policy experience and technical knowledge laid the foundation for later industrial upgrading.
At the time, the American semiconductor industry was undergoing change, and many skilled professionals were seeking new opportunities. Taiwan's government recognized the opening, brought in international technology, and sought cooperation with leading talent overseas.
Morris Chang's Business Revolution
At this point, a pivotal figure entered the story: Morris Chang.
Chang had been a senior executive at Texas Instruments and was once regarded as a possible future CEO. He later left TI and continued his career at other companies and within Taiwan's industrial system. A turning point in someone's career cannot simply be attributed to a single cause. In 1985, Chiang Ching-kuo's government invited him to Taiwan to lead ITRI and help plan the development of its high-tech industries.
In 1987, TSMC was formally established as the world's first dedicated semiconductor foundry. Chang recognized the market gap between chip design and manufacturing: by concentrating on fabrication rather than design, TSMC could become the hub of global chip production.
This model transformed the global semiconductor industry. Supported by government policy, imported technology, and strategic investment, TSMC rose rapidly, gradually challenged Samsung and Intel, and ultimately became a leading global chipmaker.
But TSMC's success belongs to more than one leader's foresight. It was the product of a collective effort across Taiwanese society. Engineers, factory workers, policymakers, and companies throughout the supply chain contributed the labor of hundreds of thousands of people to build today's TSMC. The company is not merely Taiwan's pride; it embodies its people's intelligence and hard work.
The Technological High Ground: TSMC's Global Dominance
TSMC's success lies not only in its market capitalization, but also in how difficult it is to replace within the global technology industry.
By 2024, TSMC was a crucial supplier of advanced wafer manufacturing. Any discussion of its market share must distinguish revenue, capacity, the foundry market, and particular process nodes. An unspecified claim of “more than 90 percent” cannot capture these different measures. Apple, Qualcomm, AMD, NVIDIA, and other major technology companies rely on TSMC's leading-edge processes. It is both a pillar of Taiwan's economy and a critical node in global supply chains.
Yet when a company becomes powerful enough to shape global industry, can it still belong wholly to Taiwan?
TSMC's strategic advantage lies in its leading manufacturing technology, including 3-nanometer and more advanced processes. But major economies such as the United States, Japan, and the European Union are reluctant to see such essential technology concentrated in a geopolitically sensitive place like Taiwan. TSMC's technology has become a key factor in great-power competition.
Crisis and Opportunity: Global Risks in the Semiconductor Industry
TSMC's rise has not come without costs. While global supply chains have grown heavily dependent on it, the company itself has become exposed to enormous risks.
Supply-Chain Crises and Security Concerns
In 2020, the COVID-19 pandemic disrupted the global semiconductor supply chain. Chip shortages in automotive manufacturing, consumer electronics, and other industries highlighted TSMC's central role. This shortage made governments recognize excessive reliance on Taiwanese semiconductor manufacturing as a major strategic risk.
The United States passed the CHIPS Act in 2022, seeking to attract investment in American factories from TSMC and other manufacturers and reduce dependence on Taiwan. Although presented as a measure for supply-chain security, it also represented the strategic absorption of TSMC's technology.
At the same time, mainland China accelerated its pursuit of semiconductor self-sufficiency to reduce reliance on TSMC. The company's global dominance is under pressure from multiple directions.
The Central Challenge: To Whom Does TSMC's Future Belong?
America's Attraction and Taiwan's Risk
In recent years, the US government has paid significantly greater attention to TSMC. The company's $40 billion investment in two advanced fabs in Arizona became a centerpiece of the American push for domestic semiconductor manufacturing. But is this Taiwan's strategic expansion, or a potential channel for technological leakage?
Building TSMC fabs in the United States means that advanced process technology and skilled people are moving there. This not only weakens Taiwan's technological moat; it may also erode TSMC's future competitive advantage.
Whom, in the End, Can Taiwan's Sacred Mountain Protect?
TSMC's future is more than a business question. It lies at the heart of Taiwan's economic and even political security. Advanced semiconductor technology is moving to the United States, and some of Taiwan's best engineers are being assigned overseas. How that expansion affects Taiwan's industrial cluster must still be assessed against domestic capacity, R&D investment, and changes in the supply chain. Yet the Taiwanese government's attitude toward these challenges is puzzling: is it defending TSMC, or quietly permitting its gradual hollowing-out?
Conclusion: Who Protects the Sacred Mountain, and Who Hollows It Out?
TSMC is more than a company. It is Taiwan's central asset in the global technology struggle. As technology and talent move abroad, Taiwanese society must confront a question:
Whom can the sacred mountain really protect?
If TSMC's core technologies move overseas, what will sustain Taiwan's economic advantage?
TSMC's achievements belong to all the people of Taiwan. Yet it now faces the prospect of being divided. Does Taiwanese society truly understand what it may be losing?
At the very least, I have never accepted the simple description of TSMC as an immovable sacred mountain. US–Ukraine arrangements involving minerals and a reconstruction fund do not mean Ukraine has obtained a guarantee of automatic military intervention. Nor does TSMC's overseas investment prove that Taiwan will inevitably lose outside concern for its security. My concern is how the redistribution of industrial interests will change other actors' incentives to safeguard Taiwan.
The next chapter will focus on who is selling out Taiwan: the transactions and extraction behind TSMC's investment in the United States.