Taiwan plans a future beyond microchips
"The relationship with Europe has suddenly entered the Taiwanese radar, also following situations like the one in Lithuania. Today, awareness of relations with Europe has grown considerably in a Taiwan that until now had been increasingly oriented towards the United States ", Freddie Höglund, managing director of the European Chamber of Commerce in Taiwan, told sportsgaming.win. are growing sharply. "Especially for 4 years now when offshore wind industries started investing in Taiwan, with an influx of mainly German and Danish companies. But European investments in Taiwan, which today amount to 53 billion euro, are also to be found in the semiconductor sector. To date, the Dutch Asml is the largest issuer of foreign direct investments in Taiwan, thanks to the acquisition of local companies such as Hermes Microvision ”, explains Höglund.
“The Chamber of Commerce has 39 commissions representing the various industrial sectors, from pharmaceuticals to technologies. Investments have been the most varied but for 2021 it is the energy sector that has led the growth ", says Giuseppe Izzo, vice president of the European Chamber of Commerce in Taiwan. Europeans are ruthless investors in Taiwan, much more than Americans, who instead they are less than half in terms of foreign direct investment. The United States contributes to the Taiwanese economy through outsourcing, and alone is worth 20% of Taiwan's total exports. In other words, Europeans create job opportunities, while Americans buy: Apple from Foxconn, Tesla from Pegatron and so on.
The fake industry has targeted microchips Data on counterfeiting in Europe: clothing and accessories account for 60% of the trade, but due to intellectual property infringement technology and piracy advance Read the article The reasons for the tech success of Taipei The sector that can reserve the most satisfaction in the bilateral relationship is the technological one. “Taiwan is a leader in various industrial sectors, from semiconductors to computers, from data centers to thermometers - explains Izzo -. I believe that in the future there is great potential for cooperation in the transition to electricity in the automotive sector. Taiwan has a number of key technologies such as batteries, charging stations, inverters and connectors, and partnerships already exist between companies such as Foxconn and Stellantis. In the future we can expect greater interchange, based on a new generation of semiconductors and software systems and if Europe digitalises it will also need data centers, of which Taiwan has a monopoly. "
Many wonder how Taiwan managed to build this leadership. Says Izzo: "One of the key points was to attract through the semi-governmental arm of the Industrial technology research institute (Itri, ed) Taiwanese scholars and experts who resided in the United States, including the famous Morris Chang, by building entire neighborhoods with American-style homes able to accommodate these scholars and their families. But there were also many local talents, including the creators of Acer. Today, Itri has 6,000 graduate students and 10,000 people distributed between Hsinchu and Tainan ". br>
At the center of this ecosystem are the semiconductors, on which the European Union is now moving decisively, which has recently launched a plan on the subject. “This is a production plan that aims to reach 20% of the total market by 2030. It is focused on chips and wafers in particular but its development is not specific, it is a question of passing from 10% to 20% of the global market ", says Izzo." The collaboration with Taiwan is already foreseen in these plans also in services of which Taiwan needs such as chip packaging. There is no escape from Taiwan. I believe that with the private companies in the sector present in Taiwan today, the market will more than double by 2030 and demand will remain high especially if Europe, which for now is still analogue, is digitized ", continues Izzo.
The war in Ukraine could worsen the microchip crisis The country is responsible for half of the world production of neon gas, essential for making the chips, and the 2014 precedent does not bode well for the sector Read the article The role crucial for semiconductors In the meantime, Beijing invests heavily in the sector and the United States is pressing on the giants of Taipei to cut the technological cord with the other side of the Strait. “Companies would suffer in case of decoupling, and they also suffer in case of forced coexistence,” says Izzo. For companies, the best solution is for everyone to be happy, a kind of marriage. This also applies to American companies in Asia and European companies in China. A decoupling wouldn't do anyone any good. It will be necessary to see if there will be a divorce, a forced cohabitation or a happy marriage in the future. At the moment the last option is resisting, and several companies behave like married couples living on opposite sides of the same strait. With obviously the caveat of controlled investments, especially in advanced machinery in the semiconductor sector in the range of 5 nanometers or the software to create them, as well as in the context of data centers. They are controlled sectors, but the marriage in business resists.
The feeling of many, including Taiwanese observers, is that we are moving towards greater protectionism in the sector, also because it is considered increasingly sensitive. Just think of what happened in Italy, where the government has repeatedly made use of the golden power tool to stop Chinese investments in local companies such as the Lpe di Baranzate. Or the German stop on the purchase of Siltronic by a Taiwanese company. Izzo, however, thinks differently: “I do not know the specific situation of Siltronic but the investments of Tsmc and of the semiconductor sector in general are never geographically motivated. Today, the world is more accessible, distances have shortened. The semiconductor industry is highly specialized and extremely globalized. A single chip from design to commercialization passes on average between 12 different countries and through over 12,000 production steps. It is a situation of extreme complexity that is unlikely to change in the near future ".
Although, Izzo always points out, many prospects for the sector could soon change:" Today due to a convergence of factors including Covid which has created increased demand for electronic products, the transition to electric vehicles and disruptions to global supply chains there is excess demand that will last for a while, but this is the first time we see the shortage period going on for this long. However, investments are still very present and for several industries the return is calculated every three years. So in the face of large investments in 2021, today's shortage will become an excess of capacity in 2024. And for the technology industries this return will happen even earlier. This despite the fact that the demand seems to be constantly growing. ”
How the European Commission's plan to finance the chip industry works The package includes 10 milia rdi of direct investments and 35 between private and research funds. The goal is to double the internal production of semiconductors by 2030 Read the article Next frontiers: electric vehicles, space and wave materials But the history of semiconductors will not be the last in the tradition of Asian innovation, and in particular Taiwanese. “The next success stories will come from the electric vehicle sector and from technology in general - says Izzo -. For example, we have heard about wave materials. As well as other types of flexible materials. Another promising development area is that of space, which will be increasingly intertwined with telecommunications and projects such as SpaceX's Starlink. At Chen Kung University there is a faculty on space technologies and there are already several companies in the area that are investing in this sector. Technologies in the medical field and synthetic biotechnologies will also be important. Taiwanese are extremely pragmatic when it comes to business and technology. Their innovations are tangible, present, real ”.
According to Höglund, offshore wind power must be kept an eye on, while among the areas of future bilateral cooperation the AD also mentions family policies: "The demographic is a pressing issue for Taiwan, where the birth rate is very low and the population is aging. As the European Chamber of Commerce in Taiwan we have just started a Family friendly alliance, an initiative that aims to dialogue with Europe to introduce systemic changes to society by encouraging family policies and stimulating female community in the world of work ".
And, beware, for Höglund you can have good relations with Taipei without prejudice to those with Beijing:" Many in Europe think that one thing excludes the other but I consider it a myth. It is permissible to trade in both places without particular repercussions, despite the import restrictions on some products which, however, have nothing to do with the fact that a company operates in China or Taiwan. Trade is above politics, but Europeans tend to believe that the two are intertwined and therefore move cautiously, even if I don't think it is necessary. However, the Lithuanian case has somehow fueled this belief. This is why the EU has also taken a tougher stance towards the Chinese presence in the World Trade Organization ".
