SEMI Country

Trump Storm, and the Island of No Significance

Preface
Sixty Years of Turmoil

Part A: A Chaotic World

• The Wind Drifts Gently and the Rain Falls Softly

  • Begin with the End in Mind: Mastering the Basic Framework for Future Business Opportunities.

  • Diverse Collaboration, Recreating the Universe.

  • The ability to define and solve problems.

  • Rediscovering Taiwan's Position.

• AI and "Free and Easy Wandering".

  • Another great era of fragmentation after the 17th century.

  • New Game and Competitors.

  • Responding to Exponential Growth Opportunities with a Strategic Framework.

  • Transformers and American Monopolies.

Part B: A Century, Yet Not Lonely

• The Chosen Silicon Island.

  • Go far, go together.

  • Amidst the Storm, the Rooster Crows On.

  • The Rise and Fall of Waves.

  • The Era of Mass Production and Cost-Effectiveness.

  • Such a Beautiful Land, Making Countless Heroes Bow.

• From China's Rise to the East Surpassing the West.

  • The Challenges of New China: East of the River, West of the River.

  • Strategies and Diplomacy: The Predicament of China's Semiconductor Industry.

  • The Battle for Supremacy in EVs.

• What Lies Ahead for Taiwan?

  • Semiconductor Growth Outlook: 2024 to 2030.

  • Navigating Survival Between Two Superpowers .

Preface: Sixty Years of Turmoil

Take it easy: Times are changing and opportunities are coming

The dust has settled on the 2024 US election, and "Trump's Rules of Engagement" will be the main focus of international trade and geopolitical relations for the next four years. Unlike the previous US strategy of promoting value creation with allied nations, Donald Trump believes that allies standing with the United States must develop national policies that benefit America. Trump, who places faith in political power, might view Taiwan as an insignificant island. He could potentially wield tariffs as a threat and consider canceling the CHIPS Act. But will this alter the competitive dynamics of the tech industry? Not only Taiwan, but Germany, Japan, Canada, Mexico, South Korea, and India will also need to find strategies for interacting with the United States in this new era. Even the United States must understand the true meaning of shared creation, shared benefits, and shared prosperity—values Americans have long celebrated—in the context of the artificial intelligence (AI) era.

Trump Administration Redefines International Order and America’s National Strategy

The "New Trump Era" is characterized by media fragmentation, creating a society where values are increasingly blurred in an entertainment-driven discourse. Before taking office, Trump announced a 25% tariff on imports from Canada and Mexico, causing ripples across industries. Germany’s automotive sector shuddered, and questions arose regarding NATO’s future, particularly with the ongoing Russo-Ukrainian war. Trump’s position was blunt—if NATO members will not cooperate, they should pay for their own protection.

"You gotta pay your bills," was a phrase Trump often repeated. NATO Secretary General Mark Rutte, formerly the Dutch Prime Minister, echoed similar sentiments, arguing that a 2% GDP defense budget is insufficient. China remains the ultimate focus. Companies like Huawei and SMIC may either become strategic heroes in a modern-day Thermopylae or pawns in the escalating US-China rivalry. History will record the evolution of this era, and East Asia, as during the Cold War, remains a pivotal player on the first island chain.

In Asia, political turmoil continues. On December 3, 2024, South Korean President Yoon Suk Yeol declared martial law, leading to his resignation ten days later. Japanese Prime Minister Ishiba Shigeru cautiously stressed the importance of Japan-South Korea relations. However, the frontrunner for South Korea’s presidency, Lee Jae-myung, is known for his lack of alignment with US and Japanese interests. This raises concerns that South Korea could become the weak link in the Northeast Asia tech supply chain. Trump’s policies have left second-tier nations anxious about their future. In response, Taiwan and Japan have strengthened their collaboration, while South Korea faces pressures from a declining economy and the fading dominance of Samsung.

Although Trump may serve only one term, his appointees, mostly in their 50s, are likely to shape US policies for 10 to 20 years. For the United States, Russia is a minor irritant, but China is the primary threat. China’s rapid advancements in naval capabilities are striking, with over 70% of its warships built after 2010. China’s technological advancements have transformed its naval strategies. Unlike aging Western fleets, China approaches fleet development like the consumer electronics industry—prioritizing speed and volume. While less refined, this approach could disrupt strategic balances. In the global drone industry, China’s DJI dominates. Attention now turns to Taiwan, seen as a potential alternative supplier. Whether Taiwan can seize this opportunity or remain a bystander in this shifting geopolitical landscape remains to be seen.

But in the world of technology, leaders are not merely seeking a slight competitive edge, they aim for an unassailable monopoly in the market. It does not matter who buys from whom, the key lies in creating greater value. Trump, coming from the traditional real estate industry, subjectively believes that tariffs can balance competitive advantages. However, this is an industrial-age mindset. The gap between government policies and industry realities likely exceeds the imagination of traditional politicians.

TSMC, with its superior technology, substantial capital expenditure, and economies of scale, serves as an enabler for many tech giants to create greater value. If the well-balanced supply and demand system is disrupted, leading to chaos in the global industrial order, the biggest losers would be American tech companies like Nvidia, Amazon, Apple, Microsoft, Tesla, Google, and Meta. Businessmen do not aim for “mutual destruction,” and squeezed profits do not yield attractive benefits. The true value lies in "who sets the rules of the game."

"Maintain deceitful appearances, according to which the enemy will act," is wisdom from Sun Tzu's The Art of War 《孫子兵法》. The United States is the rule-maker in today's game. Engaging in dialogue with Trump and enticing with benefits is the best strategy. The challenge lies in finding a way that benefits the United States without disadvantaging one's own country.

Young LIU, Chairman, Hon Hai Technology Group (Foxconn)

Cliff HOU, Chairman, Taiwan Semiconductor Industry Association

CHEONG Peng Tat, General Manager and Vice President, Zeiss Taiwan

CHIEN Chen-Fu, Chair Professor, National Tsing Hua University

CY HUANG, Chairman, FCC Partners

Daniel TSENG, President, Corning Display Technologies China

Eric CHENG, Founder and Chairman, WT Microelectronics

HUANG Xian-Hua, Chairman, Grand Fortune Securities

Hung-Liang HSIEH, Chairman, Scientech Corp

Jeffrey GAU, President and CEO, Wistron NeWeb

Kenneth TAI, Chairman, Zettabyte

LEE Yung-Ran, Managing Partner, Y.R. Lee and Partners

Peter J. SHER, Chair Professor, Feng Chia University

Prince YUN, President, Avnet Asia Pacific

Raymond SOONG, Founder, Lite-On

Sean PIEN, General Manager, Microsoft Taiwan

Colley Hwang

Founder of DIGITIMES and Chairman of IC Broadcasting, he brings nearly 40 years of expertise in technology industry analysis. A witness to the evolution of the global semiconductor industry—from the rise of personal computers and mobile communications to the Internet of Things—he has lived in Korea and the United States, gaining a unique international perspective. Frequently invited to speak at the headquarters of leading global corporations, his foresight and in-depth analysis of industry dynamics have earned him the trust and respect of the sector.

A seasoned cross-industry entrepreneur and renowned industry expert, he has held prominent positions including Director of the Market Intelligence Center (MIC) at the Institute for Information Industry in Taiwan. He has served as a policy advisor to both domestic and international governments and as a board member for key organizations such as the Aviation Development Fund, and TAITRA. A frequent lecturer at leading universities, he is currently a Director of the Monte Jade Science & Technology Association, a Board Director at Alltek, and a Director of the Taiwan Electronic Components Industry Association.