According to Martin, the Taiwanese government has regularly intervened to revive the economy. “And that industrialization got a boost in the 1970s, after the great oil crisis and the loss of UN recognition. Before that, economic growth was mainly based on agriculture. Taiwan had to look for another growth engine, and a risky step was taken: the semiconductor industry. “The government’s role in this was, of course, significant. The first step was to set up a large research institute called the Industrial Technology Research Institute (ITRI).”
“Scientists, professors, and lecturers with semiconductor expertise were gathered there using public funds,” says Martin. “It is ultimately also here that TSMC and other chip manufacturers started as joint ventures. This institute is a place where knowledge is gathered to promote research and where staff can be trained and educated. It worked: Factories were built, and Taiwan’s semiconductor industry began to grow. “The government has therefore set in motion growth on its own.” You could call it industrial policy. It has since made a comeback. “
After the establishment of ITRI, which became the driving force behind the new producers, it still proved very difficult for the factories to continue the growth. “It was very difficult for semiconductor manufacturers to find financing. The Taiwanese government has deposited a lot of money for this in the years since. So the growth of the industry was actually driven by the government in the beginning.”
Still, Martin believes it will be difficult for the Netherlands and other European countries to emulate Taiwan’s chip strategy. She sees that industrial policy has become more popular in recent years. Also in the EU. “There is a lot of criticism of the current European plans for chip factories. For example, the quantities are seen as a drop in the ocean. In addition, the European Commission came up with a similar initiative in 2013, but at that time it was not possible to stimulate the production of chips sufficiently. ” For Martin, it is important to invest heavily in talent recruitment and collaboration with industry and universities.
‘Leadership position was not foreseen’
Now, decades after the first steps, Taiwan is a global leader in, among other things, the production of advanced chips. ‘But I don’t think anyone could have foreseen it at the time. The position is now primarily due to TSMC, which has been set up in collaboration with the government, but also by Philips. In the late 1980s, this company was the first to focus on producing chips for other companies, the first ‘pure-play foundry’, while there was no massive demand for it at the time. At that time, all companies were still making their own chips for their products. ”
That focus on chips only was very risky. “Financing was sought, but there was serious doubt about the business model,” says Martin. The more advanced the chips became, the harder it became for companies to make their own computer chips. TSMC was able to take advantage of this and continued to grow. When Apple wanted chips for its iPhones in 2012, TSMC’s growth really took off. Many other companies followed.
Intervention by the Taiwanese government
The guiding role of the Taiwanese government has been important over the years, but it also has a downside. Geopolitics now dominates the market. “The government provided chips with a small industry with great growth potential and then on its own created an investment climate that also attracts other companies. This also affects Taiwan’s geopolitical position. Tensions between the US and China have major consequences for companies like TSMC. Think of the extension of sanctions from the United States, which does not want the chips to be used by Chinese companies like Huawei. The Chinese sales market also plays a big role, and it also exerts pressure. ”
Martin outlines an example. “US President Joe Biden asked the TSMC for supply chain information. This included customers. The US wants to make the supply chain more secure,” the story went. Taiwanese companies were in a difficult position because they are strong in protecting customer data when it comes to trade secrets. ” At such a time, the Taiwanese government also comes into the picture to interfere. “There was a solution where the United States did not get all the information they wanted, but they got ins and outs about production capacity.”
Since the recent war between Russia and Ukraine, tensions over Taiwan have also risen. While the eyes are on other places, rumors of a possible China invasion of Taiwan are growing. That excitement has been there for a long time. “The Taiwanese semiconductor is also called a ‘Silicon Shield’, which is intended to deter Chinese military action. After all, damage to Taiwanese industry would have major consequences for the rest of the sector, and China is also dependent on Taiwan in this area. ”
Taiwan’s digital instruments
Taiwan is not only at the forefront of fast Wi-Fi, artificial intelligence and advanced chips, there is also a lot to learn from the country in terms of digital democratic tools. A Committee on Digital Affairs and a Minister for Digital Affairs have long existed.
In 2015, the online platform vTaiwan.tw was founded in collaboration with the hacker collective g0v. The Netherlands also sees this as an example. At vTaiwan.tw, citizens can come up with legislative proposals and discuss proposals. The platform brings together political officials, politicians, researchers, experts, civil society organizations, citizens and businesses in consultation processes. Each ministry has a ‘participatory employee’ who is responsible for overseeing the processes so that citizens are involved in the proposal phase, allowed to ask questions where their opinion is grouped and visualized. Afterwards, there are physical meetings for stakeholders, which are streamed. Citizens can ask questions via the chat.