China's ambitions in the semiconductor sphere and Taiwan's dilemma

Ming-Chin Monique Chu (Author) (2016) China's ambitions in the semiconductor sphere and Taiwan's dilemma China. BBC Chinese Website

Record type: Website

Abstract

The semiconductor industry is a vital industry for military establishments worldwide, and the control of, or loss of control of, this key industry has enormous strategic implications. This op-ed outlines China’s motivations to enhance its domestic semiconductor capability because of national security considerations and argues that Chinese semiconductor firms’ recent merger and acquisition (M&A) activities targeting the U.S. and Taiwanese companies should be examined in the context outlined. Based on my research fieldwork that culminated in over 160 elite interviews as of 2009, I argue that the Taiwanese contributions to China’s nascent semiconductor industry have permeated through integrated circuit (IC) design, fabrication, packaging and testing subsectors of the industry through trans-border transfers of technology, human resources and investment especially since 2000. This process of sectoral production globalization, in turn, has resulted in economic and security ramifications for Taiwan. Against this backdrop, Taiwan’s President-elect Tsai Ing-wen will be faced with a major dilemma after she takes office on 20 May in determining whether the Chinese M&A applications should be permitted to go ahead. Such dilemma becomes exacerbated when the Chinese M&A ambitions start to target high-end firms in the semiconductor supply chain, given the national security concerns involved.

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