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HomeWorldTaiwan bets on chip industry against fears of Chinese invasion

Taiwan bets on chip industry against fears of Chinese invasion


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Fragmented and somber scenes of Taipei transmute into meshes formed by countless semiconductors. The installation “Wafer Bearer Deep Rain”, on display at the Museum of Contemporary Art in the capital of Taiwan, reflects a self-image little perceived in the West: the island’s main economic asset is seen as life insurance against an invasion by China, something intrinsic to the its existence.

The risk of an attack eludes the casual visitor. For him, it is Covid, not the Asian giant separated by 130 km of sea, that is the priority of the local government. Upon disembarking, each passenger receives four self-tests to detect the coronavirus. On the streets, it’s very rare to see someone without a mask and, in commercial establishments, it’s common to find an employee at the entrance just to splash alcohol on the customers’ hands.

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But a peek at the front page of the Taipei Times the day after the meeting between Joe Biden and Xi Jinping in Indonesia shows that this is not the case. Without hiding the homegrown bias, the newspaper places the US president, “opposing intimidation against Taiwan”, as the protagonist in its headline.

Central to the tensions between Washington and Beijing, Taiwan, refuge of the losers in the civil war won by the communists in 1949, is seen as a rebellious province by China, and the promise to reabsorb it is always accompanied by the rhetoric that the use of force so it is not ruled out.

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In Taipei, however, it is very difficult to find visual references to threats from China. There is, in fact, among the population, a skepticism around the idea that a continental attack will actually occur, at least in the near future, as well as the belief that the daily life of the city, with the ubiquitous scooters in its busy streets —and somewhat silent—, will be preserved.

Younger people, in particular, treat Beijing’s warnings with a certain indifference, perhaps a bluff, as defined by a 28-year-old bartender in the Da’an district. For those who grew up hearing warnings that Taiwan would be taken, the repetition of the warnings makes them sound more like bravado than intimidation.

An August survey by the Taiwanese Public Opinion Foundation showed that 52.7% of respondents consider the chance of an invasion very unlikely or impossible, while 26.7% say there is some possibility and 12.3% believe it is highly possible —8.4 % were unable to answer.

Part of this conviction relies on the Silicon Shield, or silicon shield, a reference to the chip industry in Taiwan, with the giant TSMC (Taiwan Semiconductor Manufacturing Company) at the forefront. Responsible for about 90% of the market for high-quality semiconductors, the company, like others of its kind there, would serve as a guarantee, as a conflict would have serious repercussions on the global supply chain.

“A bombing of our factory is the last thing I’m worried about,” says Miin Wu, CEO of Macronix, another maker of chips in Taiwan. “Because semiconductors here are in a great leadership position, and the global economy in a world without our chips would be in big trouble.”

Wu, of course, is interested in the issue, since he heads a company in the sector, but semiconductors, present in items of all sorts, from cell phones to washing machines, from cars to war material, have in fact become an obsession in the USA. and China, given the difficulty in producing them. Asked by CNN why both countries are still not capable of making high-quality chips like Taiwan, Mark Liu, president of TSMC, replied: “They can, in a few years.” In this industry, experience counts.

In August, the Biden government announced the Chips Act, a package of investments and restrictions to stimulate semiconductor production in the US. On the one hand, the Democrat released billionaire funds to attract —or force, depending on who counts— companies to build chip factories in the country, as TSMC will do in Arizona. On the other hand, the measure tries to control the flow of components, imposing rules so that items that have American materials are not exported to China, damaging Beijing’s ability to access crucial technologies and delaying the Asian country’s military program.

The White House moves to secure the supply of components also point to a possible problem for Taiwan, since, without relying on the island’s most valuable products, the US could be less interested in fulfilling its promise to defend the territory from an eventual attack. Chinese. So far, however, American rhetoric is one of compromise, as the controversial visit of Democrat Nancy Pelosi, Speaker of the US House of Representatives, in August showed.

In any case, Wu, from Macronix, was cornered in front of journalists from the international press when asked about his opinion regarding a reunification of China with Taiwan —”I’m not a politician, I’m just any guy”. A few days ago, Morris Chang, founder of TSCM, congratulated Xi during the APEC summit, the forum for Asia-Pacific Economic Cooperation, in Bangkok, for his third term.

The fulfillment, which would have had the permission of the Taiwanese government, also reveals the strong economic interaction between the two parties, another obstacle to a military effort against the island. In 2020, according to the Taiwanese government, the volume of trade through the strait was US$ 166 billion (R$ 883.3 billion).

“China is our biggest trading partner, with 30% of the total turnover,” says Chern-Chyi Chen, Taiwan’s deputy economy minister. “I wouldn’t say we’re dependent on China. It’s more of a mutual supply chain relationship created by market power. It’s not the government that seeks that.”

Before annexing Crimea in 2014, Russia traded around US$ 29 billion (R$ 154.3 billion) with Ukraine, a volume unable to stop Vladimir Putin’s desire to capture the peninsula and, eight years later , invade the neighbor. Today, the conflict that has been unfolding in Eastern Europe since the end of February has become the main reference for Taiwanese of what can happen on the island.

Mentions of Ukraine abound frequently in interviews with researchers and government officials. Sometimes they recall that the almost general disbelief that the Kremlin leader would start a war serves as a warning so that the Taiwanese population is not taken by surprise.

Therefore, scholars such as Raymond CE Sung and I-Chung Lai, from the think tanks Taiwan New Constitution Foundation and Prospect Foundation, respectively, challenge skepticism and emphasize the need to remain alert, recalling the failed predictions of many analysts that the cost of a war would be too high and therefore not worth paying the bill —as Putin has been doing in Ukraine.

“One of the main messages we convey is: look at Ukraine. The Ukrainians thought war was impossible, even with the Russian army on the border for a whole month. They thought the Russians were just bluffing,” says Sung. “So we say, ‘We need to prepare for the worst.’

The Taiwanese government closely monitors how this game unfolds, since domestic contexts will influence any assistance offered by allied countries on the island. In the US, the weight of dissatisfied slices with the high cost of living resulting from conflicts and reticent with spending with foreign nations can be crucial in an election or to guide government decisions.

Taiwanese Minister of Foreign Affairs Joseph Wu’s statement to foreign media mirrors this situation well. For him, China is observing, in the Ukraine War, how this “psychological fatigue” among the population will impact in practice the sending of weapons and other resources. Another direct reference to the conflict in Eastern Europe is Taipei’s repetition that, in the end, it is a matter of democracy against authoritarian regimes, a speech also embraced by Volodimir Zelensky.

With an authoritarian past, with decades under martial law, Taiwan had its first free presidential election in 1996. Since then, it reinforces the discourse and gives practical evidence that it is a free society, in a marked difference in relation to the dictatorship led by the Communist Party in China. In recent weeks, Taipei has been flooded with political propaganda due to local elections, held this Saturday (26), with a number of posters reminiscent of the electoral environment in Brazil in the 1990s.

Thus, the concern to show itself to be a vibrant democracy also involves the fear that Beijing is investing in a campaign to convince the population for reunification, sometimes with fake news —a less risky path than the onerous military costs.

With Xi surrounded by men who tend to say only “yes, sir” and about to begin an unprecedented third term that could become a fourth, time is on China’s side. Until then, Taiwan reflects the work of the artist duo Xia Lin and Sheryl Cheung exhibited at the Museum of Contemporary Art in Taipei, where the Taiwanese capital, in the midst of fog and darkness, is transformed into millions of semiconductors.

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