8. Brexit, Supply Chains and the Contest for Supremacy: The Case of Taiwan and the Semiconductor Industry

Taiwan is a world leader in critical components of the information and technology sector, particularly semiconductors. In this chapter, we explore how major political upheaval, in the form of Brexit and the US-China trade war, impact Taiwan’s position in the global semiconductor industry. We examine how supply chains with European semiconductor players—particularly Britain’s Arm Holdings and Dutch ASML—stand to be disrupted. We find that the US-China trade war poses more opportunities and risks than done-deal Brexit in the immediate term. Furthermore, thus far, the Taiwanese semiconductor industry appears to be a beneficiary of the US-China trade dispute, as Taiwan’s leading firms, notably TSMC, are pleasing the USA and China. Yet in doing so, these firms risk their non-alignment strategy backfiring, and having one of the world tech giants reprimanding them, or worse, cutting them off. For now, though, Taiwanese firms, especially TSMC, are such essential providers for both China and the USA, that the foundries continue to expand their relationships with both sides. Longer term, the political uncertainties risk an erosion of access to talent and availability of cross-border supply chains, which puts downward pressure on Taiwan in the globally organized semiconductor industry.