Taiwan’s Reliance on the Semiconductor Industry: A Geopolitical Achilles’ Heel?

043 – 8 April 2024 The authors' views are their own and do not represent the official position of the Institute of Defence and Strategic Studies of the S. [...] While the semiconductor industry continues to be one of Taiwan’s strongest selling points, the over-reliance on the chip sector amid strained cross-strait relations could jeopardise the island's economy in situations of huge supply chain disruptions. [...] While Beijing still needs Taiwanese technology and is unlikely to boycott Taiwan’s advanced chips in the near term, the mainland seems determined to focus on domestic production to gradually move towards self-reliance amid the ongoing trade war with the United States. [...] While investment in the industry is essential for boosting research and development, heavy reliance on the sector can heighten the risk of the island becoming a target for cyberattacks and a pawn in the major powers’ battle for their own geopolitical agendas. [...] While diversification may seem ambitious in the short run, the redistribution of resources to other crucial industries would encourage Taiwan to prioritise security and economic growth simultaneously in the long term.