President Lai Ching-te says Taiwan’s semiconductor dominance rests not only on technological expertise, but on democracy, reliable institutions and the rule of law as geopolitical competition over advanced chips intensifies.

Taiwan is seeking to redefine the global semiconductor contest as more than a race for manufacturing capacity, arguing that political stability, institutional trust and democratic governance are becoming strategic assets in an industry now central to artificial intelligence, defence and the world economy.

Speaking at the SEMICON technology exhibition in Taipei on September 1, Taiwanese President Lai Ching-te said the island’s position at the heart of the advanced chip industry was built partly on its democratic system and adherence to the rule of law, qualities he presented as essential to Taiwan’s reputation as a dependable technology partner.

The message comes at a moment when semiconductors have evolved from specialized electronic components into one of the most strategically important commodities in the world.

Advanced processors now underpin artificial-intelligence systems, cloud computing, smartphones, autonomous technologies, military platforms and increasingly sophisticated industrial infrastructure. Taiwan sits at the centre of that ecosystem, largely because it is home to TSMC, the world’s largest contract chip manufacturer and a critical producer of the leading-edge processors powering the AI boom.

That concentration has also created a geopolitical dilemma.

Governments in the United States, Europe and Asia are investing heavily to diversify semiconductor production and reduce the risk associated with relying on a relatively small number of manufacturing centres. Washington in particular has encouraged Taiwanese manufacturers to expand capacity on American soil.

TSMC has responded with an enormous international investment programme. Reuters reported that the company’s planned investment in the United States has reached roughly $265 billion, while the Taiwanese group is also expanding in Europe, including through a €3.5 billion semiconductor facility in Germany.

Those projects illustrate an important change in the semiconductor industry.

Chipmaking is no longer being organised exclusively around efficiency and production costs. Governments and companies increasingly consider national security, supply-chain resilience, geopolitical alliances and access to critical technologies when deciding where new factories should be constructed.

Taiwan is therefore attempting to turn what could appear to be a vulnerability — the international dispersion of semiconductor production — into a broader network of technological partnerships.

Lai called for deeper international cooperation and encouraged European countries to improve investment conditions and advance agreements aimed at reducing taxation barriers between Taiwan and European economies.

The stakes are considerable.

A cutting-edge semiconductor fabrication plant can cost tens of billions of dollars, requires exceptionally sophisticated equipment and depends on an international supply chain involving chemicals, precision machinery, software, advanced materials and highly specialized engineers.

Replicating Taiwan’s semiconductor ecosystem elsewhere is consequently much more difficult than simply building factories.

Decades of accumulated engineering expertise, supplier relationships and manufacturing knowledge have helped create an industrial network that remains extremely difficult to reproduce.

At the same time, the explosive expansion of artificial intelligence is creating demand for increasingly powerful chips. Data centres supporting generative AI and large-scale computing systems require advanced processors in quantities that would have seemed extraordinary only a few years ago.

This makes semiconductor capacity a form of technological power.

Countries capable of securing reliable access to advanced processors will have an advantage in developing artificial intelligence, defence technologies, telecommunications and next-generation scientific computing.

Taiwan’s latest message is therefore significant beyond the semiconductor industry itself.

By linking technological leadership to democratic governance and institutional reliability, Taipei is attempting to position itself as more than the world’s leading advanced-chip manufacturing centre. It wants to be seen as a trusted cornerstone of the emerging global technology architecture.

As competition between the United States and China reshapes international supply chains, the semiconductor industry is becoming one of the clearest examples of how technology, economics and geopolitics are converging.

The next generation of chips may be measured in nanometres.

But increasingly, the competition surrounding them is being measured in something much harder to manufacture: trust.