But drive north from the city today, past the National Taiwan Museum of History, and you’ll find yourself surrounded by dozens of drab, low-rise industrial blocks. In place of rural peace, there is the hustle and bustle of construction sites. Clusters of young workers smoke and chat in the shade of the trees, while others run along the street under the fierce sun, grabbing lunch from noodle stalls. “This was a lot different when I was growing up,” said a local in his 20s. “Now it’s all engineers, scientists and new buildings.” For Taiwan, he discovered a profitable new crop: making cutting-edge computer chips, the tiny silicon semiconductors that are the building blocks of modern society from national defense to power grids, health systems, stock trading, transportation and cellphones phones. Taiwan has discovered a lucrative new cash crop: manufacturing cutting-edge computer chips Already this fast-growing science park in the south of the island produces the most advanced chips in the world, 10,000 times thinner than paper. It will soon create the next generation that will be even smaller, faster and more efficient. But such is Taiwan’s dominance of the market, dramatically outstripping China and the United States, there are fears of a catastrophic global impact if the Chinese government ever carries out its threat to seize Taiwan, the thriving island republic on its doorstep. “We are all now dependent on peace in the Taiwan Strait,” said Chris Miller, a professor of economic history and author of Chip War, a book that analyzes the battle for control of microchips, which he suggests are now the most critical industrial resource of humanity. “The cost of the conflict between China and Taiwan could run into the trillions for the world, with almost every company affected amid multi-year delays for goods our society relies on. The shock could be even greater than the Covid pandemic.’ “We all now depend on peace in the Taiwan Strait,” said Chris Miller, a professor of economic history and author of Chip War, a book that analyzes the battle for control of microchips, which he suggests are now the most critical industrial resource of humanity. Miller sees microchips as “the new oil” – a scarce resource of enormous strategic importance that fuels military, economic and geopolitical power. A typical cell phone contains 22 chips, while even a small diabetes monitor has four and a kitchen coffee maker three. Such is their importance that some experts fear the Beijing regime may be motivated to attack Taiwan simply to seize its chip-making foundries. China has a surprisingly poor track record in this industry. It spent more than $100bn (£84bn) developing its own semiconductors, only to discover recently that much of the money had disappeared due to corruption. Its semiconductor industry is believed to be at least a decade behind Taiwan’s. However, in contrast, others suggest that Taiwan’s $125bn (£106bn) chip industry could actually prevent an invasion, as China’s companies and military are so dependent on it. It has been described as a “silicon shield” and “huguo shenshan” – “the magic mountain that protects the nation”. “If there is a war in the Taiwan Strait, there will be no winner,” said Lee Hsi-min, the country’s former military chief. “Taiwan is way ahead and we supply the world with the most advanced chip, so it’s kind of an economic deterrent.” Ominously, however, the admiral pointed out that the war in Ukraine shows that dictatorships do not always act rationally. “Beijing may agree that it would be devastating, but that may not be enough to stop them.” Key to Taiwan’s chip dominance is a visionary tech entrepreneur in his 90s who reads Shakespeare before bed to gain wisdom about “the kindness, the greed, the cruelty and the ugliness of human nature.” Over the past decade, Morris Chang has turned his business into a pivotal force in global technology and one of the world’s most valuable companies – yet few outside the industry know the name of either the billionaire visionary or his company, let alone of his remarkable personal history. Winning a place at Harvard University in the US after a difficult childhood in China and Hong Kong overshadowed by war, poverty and instability, he steadily rose through the ranks at US semiconductor company Texas Instruments. When passed for the top job, Chang accepted Taiwan’s offer to modernize its technology sector by creating a semiconductor industry – then left to start his own company, Taiwan Semiconductor Manufacturing Company (TSMC). Over the past decade, Morris Chang has transformed his business into a pivotal force in global technology and one of the most valuable companies in the world – Taiwan Semiconductor Manufacturing Company (TSMC) His breakthrough came in 2012 when he won a contract to make chips for Apple’s iPhone. Now, just ten years later, his company is the largest contract chipmaker on the planet, controlling nearly 90 percent of the market for the most advanced superconductors. Chang’s genius was to focus on manufacturing rather than design, as he saw that technology companies would outsource manufacturing as chip foundries became increasingly complex and expensive to operate. This meant that his rise went largely unnoticed, as all of his company’s products appeared under other brands, while generating huge profits for reinvestment. The company’s latest multibillion-pound plant in Tainan, the size of 22 football pitches, will soon produce the next generation of brands expected to be up to 70 percent faster and more efficient than the most advanced now. production – which only one other competitor, Samsung in South Korea, can do. His breakthrough came in 2012 when he won a contract to make chips for Apple’s iPhone Although Chang has now stepped down as chairman, he spearheaded Taiwan’s emergence as a dominant force in chipmaking with teams of supporting companies fueling his success. This has sparked jealousies in China and the US – with the latest alarm triggered by China’s rattling after the controversial recent visit to Taiwan by Nancy Pelosi, the speaker of the US House of Representatives. He met with a top TSMC executive – as did five other US congressional politicians days later – which helped fuel China’s anger over Washington’s top official visiting Taiwan in 25 years. The communist dictatorship has unleashed an unprecedented show of military force in the skies and seas around Taiwan – intended to send a stark warning that it views the island as a breakaway province, not a sovereign state. President Xi Jinping has declared China’s intention to “use all necessary means” to seize the prosperous island republic 110 miles off its coast. The world got a taste of Taiwan’s importance last year when automakers in Germany, Japan and the US were forced to halt vehicle production and close factories due to a chip shortage caused by the pandemic. The technology has become increasingly central to the battle for global supremacy between China and the US, which has forced TSMC to stop supplying Huawei, the Chinese telecom giant that was its biggest customer after Apple. Chang’s genius was to focus on manufacturing rather than design, as he saw that technology companies would outsource manufacturing as chip foundries became increasingly complex and expensive to operate. TSMC has opened two factories in China and is building one in Arizona. However, Taiwan is still home to 15 of its manufacturing plants and most advanced manufacturing facilities, along with 57,000 of its 63,000 employees – half of whom hold PhDs or postgraduate degrees. An industry analyst in Taiwan told me Beijing was trying to go after staff with big pay deals. “I have seen many friends go to China, but after three to five years they are sidelined after offering all their knowledge and skills,” he said – adding that when they return, they are treated as traitors and often struggle to find good jobs. The big question is whether the Chinese government will persist with such tactics—or take more immediate action that could have cataclysmic consequences for the entire world.
