While 2020 was an extremely challenging year for individuals and companies throughout the world, one industry managed to experience substantial growth of an estimated 8.4% globally. That industry was semiconductors, producers of the tiny chips that power virtually all of the world’s electronic devices, handsets, tablets, and computers.

And nowhere was the production of these silicon-based products as fruitful as it was in Taiwan, where semiconductor sector growth in 2020 came to an astounding 20.7%, raising the industry’s annual production value over NT$3 trillion (US$107 billion). In fact, 2020 saw Taiwan become the world’s second-largest semiconductor production center, behind the U.S.

Helping to facilitate this impressive growth and connect Taiwan’s electronics manufacturing and design suppliers to the world marketplace is SEMI, an industry organization with a global reach.

Terry Tsao, Global Chief Marketing Officer and President of Taiwan, SEMI, notes that the acceleration in the tech rivalry between the U.S. and China that began a few years ago was the initial spark that brought Taiwan’s chipmakers onto the global radar screen.

COVID-19 has also created new opportunities for the semiconductor industry. The accelerated pace of global digitalization brought on by the pandemic has resulted in a surge of innovation in the areas of 5G, artificial intelligence, and high-performance computing, for which semiconductors play an important part.

The increased demand for advanced manufacturing processes to produce the chips that power these technologies drew even more attention to Taiwan’s semiconductor producers and their outsized role in the global tech supply chain. It also boosted revenues and encouraged increased investment by Taiwan’s semiconductor manufacturers.

Robust Industry

Tsao breaks down Taiwan’s semiconductor-related strengths into several major categories. First is its position as a world leader in a number of sub-sectors. Taiwan’s foundry capacity is unmatched, having experienced over 20% growth in 2020.

Furthermore, Taiwan has been the top materials market for 10 consecutive years, and its consumption of semiconductor equipment reached US$17.1 billion in 2019. Another area where Taiwan shines is advanced packaging and testing – dominated by ASE, which enjoys a 21% share of the global market – and it is host to three of the top 10 IC design companies in the world.

Secondly, over the decades Taiwan has developed one of the most comprehensive semiconductor ecosystems in the world. From leading IC design companies like MediaTek to TSMC’s foundries, packaging giant ASE and all of the small- and medium-sized enterprises in between, Taiwan’s industrial cluster is incredibly functional and technologically advanced. In addition, foreign firms such as fabless chip designer Qualcomm and equipment manufacturer Applied Materials can support and complete Taiwan’s semiconductor industry ecosystem.

Taiwan’s microchip producers also benefit from substantial policy support. The Tsai administration has prioritized the development of the island’s semiconductor sector under its Six Core Strategic Industries initiative, launched last year. Tsao says that he has witnessed greater momentum and enthusiasm from government leaders since the program was introduced.

Lastly, he emphasizes that right now is a very critical time for countries around the world to determine a roadmap for their technological development. He posits that the semiconductor industry’s importance to such plans is yet another of its strengths.

Global Headwinds

Nevertheless, Taiwan will face some challenges to its position in the industry in the years ahead. Foremost among these is talent. While TSMC is one of the world’s most valuable companies, it faces a shortage of quality talent at its home base in Taiwan, and it is not alone in this situation.

SEMI Taiwan is therefore very involved in workforce development through global initiatives such as its High Tech U program for junior and senior high school students. Tsao and SEMI Taiwan also support efforts, such as those undertaken by the Talent Circulation Alliance, to make Taiwan a more competitive, capable, internationally oriented talent market.

Another major challenge facing Taiwan’s semiconductor industry is the ongoing geopolitical tensions that impact operations and competition. Tsao says that big Taiwanese companies will need to figure out ways to navigate these issues, especially considering their increased visibility on the world stage.

SEMI is engaged in various advocacy efforts to strengthen the semiconductor industry supply chain, which relies on the interconnectedness of global economies and the free flow of goods and data across borders. Its core trade principles include the protection of intellectual property rights, the reduction and elimination of tariffs, the harmonization of global technology standards, and a transparent, rules-based global trading system that fosters fair competition and market access for all companies in the semiconductor supply chain.

SEMI Taiwan will continue to promote the interests of Taiwan’s semiconductor industry worldwide and underscore its complementarity with other global markets. It will also expand its role as a bridge between Taiwan’s semiconductor manufacturers and other industries to produce innovative applications that can positively impact the world.