Taiwan is the production hub for the majority of the world’s semiconductors. This paper investigates the role of Taiwan’s semiconductors in today’s computing and global technology development. It then examines the potential risks to economies, security and geopolitics of the world in the event of any failure or disruptions in Taiwan’s semiconductor supply. We will further develop the metaphor of Taiwan’s semiconductor being the “binding chain” that supports the global high-tech value chain, analyse the structural vulnerabilities in the chain, and propose possible solutions to enhance the strength of the chain, to safeguard the global high-tech value chain and ensure the security of high-tech industries.

The country that leads the world in semiconductor manufacturing is Taiwan. The design and IP are made in America, Europe and elsewhere, but the actual production of the leading-edge 3nm and 5nm semiconductors is carried out almost exclusively in Taiwan-by-Taiwan Semiconductor Manufacturing Company (TSMC). The finished chips are then tested, packaged and assembled into components and end-products such as mobile phones, servers, self-driving cars, medical devices, defence and security products, etc. The chips made in Taiwan are critical to holding together the complex global supply chain of materials that is required to produce the end-products for all these products. Remove the glue that holds the supply chain together, and the whole system collapses, with all economies being at risk.

The global semiconductor supply chain is a very important infrastructure. Taiwan’s semiconductors are the backbone that supports the global economy and advances the development of new technologies in fields such as AI, cloud computing and smart manufacturing. The semiconductor is also used in military and cyber warfare applications, which are important to a nation’s national security. With its near monopoly of the leading-edge fabrication technology, Taiwan has a huge bargaining chip to play in the world of international politics. Other countries realise that their economic and national security interests are closely tied to Taiwan’s ability to provide leading-edge semiconductors on the global market. In this way, the geopolitical status of Taiwan has been greatly exaggerated because of its tiny physical size and unique role in the global semiconductor supply chain.

The semiconductor global supply chain is unstable. Mainly for three reasons: First, the concentration of the global semiconductor supply chain in Taiwan means that there is a bottleneck. In addition, the global semiconductor production process is prone to risks from natural disasters, such as earthquakes and typhoons. And the instability in the Taiwan Strait between Taiwan and China may also affect the stability of the global semiconductor supply chain. Not only is the manufacturing process of semiconductors complex, but also replicating Taiwan’s global semiconductor industry in other countries is a long-term process that requires advanced technology, talents and a stable global materials supply chain. At least it cannot replace Taiwan’s semiconductor fabrication facilities with the same production scale soon. Under the current situation of an unstable global materials supply chain, the stability of the global digital economy also heavily depends on Taiwan’s semiconductor industry.

Many factors could cause chaos in the global supply chain. The entire global supply chain is not equipped to handle an event of the magnitude of a pandemic. Disruptions in a whole host of supply chains can cause shortages in almost every industry in the world. There is a very real risk of conflict in the global semiconductor supply chain, with the potential to cut off supplies in the event of an all-out war between China and Taiwan, or between the US and China, that could bring economies to a standstill. In addition, the global competition for leadership in the semiconductor business, which is increasingly becoming a national security issue, has the potential to split the supply chain into sections and cause it to become much less efficient. The global supply chain is under pressure from natural disasters, geopolitics and technology.

The solutions must be immediate and diverse. One of the options is to diversify semiconductor production. The US, Japan and the EU are trying to develop their domestic production to be less dependent on Taiwan. This process will take years, but to ensure future security, it is necessary to act now. A cooperative approach is also needed, while countries should strive together for the creation of a global, decentralised, and diversified semiconductor production network with high productivity and with multiple redundancies. Taiwan should work more on the international level by creating subsidiaries and joint ventures abroad to diversify its knowledge of the semiconductor production process and to invest in the R&D of the sector. Moreover, Taiwan must obtain political protection to ensure the security of the sector, through international diplomacy to maintain stability in the Taiwan Strait. The production of semiconductors cannot take place in a war environment.

Taiwan’s semiconductor industry is the main artery of the global computing system, and this is of great economic, national security and geopolitical significance. Not only is it crucial to Taiwan, but it is also vital to the rest of the world. Due to its complex global supply chain, it can be easily exposed to the risks of natural disasters, political conflict and changes in the global supply system, and therefore must be diversified and developed through international cooperation, innovation and political stability to maintain a stable global semiconductor industry. This is not only essential for the development of Taiwan’s high-tech industry, but also vital to the maintenance of the global computing system, and thus to modern civilisation itself.

The opinions expressed in this article are the author’s own.

Lee, M. (2026). Taiwan’s chip security push lifts domestic suppliers. Taiwan News Publishing. 

Richter, J. (2026). Supply chain in the semiconductor industry statistics: Market data report 2026. Gitnux Marketdata Report Publishing.

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