The first session, “Semiconductor Supply Chain Resilience Dialogue: The Next Steps for Taiwan-US Semiconductor Supply Chain Cooperation,” was moderated by Jeremy Chih-Cheng Chang, CEO and director of the Economic Security Research Program at the Research Institute for Democracy, Society, and Emerging Technology (DSET). The session delved into the supply chain risks, future challenges, and opportunities for US-Taiwan cooperation amidst US-China technological competition.
The session featured five speakers: Chris Miller, author of Chip War; Tarun Chhabra, Director of National Security Policy at Anthropic, an AI startup; David Feith, Senior Fellow at the Hudson Institute; Chris McGuire, Senior Fellow for China and Emerging Technologies at the Council on Foreign Relations (CFR); and Terry Tsao, President of SEMI Taiwan. They discussed the future challenges and opportunities for U.S.-Taiwan cooperation in the AI era, examining U.S.-China technological competition and supply chain risks.
Chris Miller discussed China’s ambitions for self-reliance and the U.S.-Taiwan response strategies, pointing out differences in U.S. and Chinese AI development strategies, emphasizing U.S. pursuit of AGI while China’s AI development focuses on industrial development across the “traditional” economy. He also refuted the myth that the U.S. is “hollowing out” Taiwan, reiterating the extremely strong technological and economic ties between the U.S. and Taiwan. Tarun Chhabra stated that in the face of the risk of chip smuggling and illicit model distillation, the United States and Taiwan must establish a systematic cooperation mechanism to strengthen software supply chain management and national defense. David Feith emphasized that the U.S. strategy towards China has bipartisan consensus, and Taiwan, as an irreplaceable AI hardware center, should ensure investment in defense and critical manufacturing, focusing on addressing the core threats from China. Chris McGuire anticipates that the U.S. will push for new export control legislation to protect national security assets such as cutting-edge chips, calling for the establishment of absolute red lines and hoping that Taiwan’s relevant regulations will align with those of the US. Terry Tsao, from an industry perspective, pointed out that the globalization of semiconductor manufacturing in the United States aims to expand business while keeping R&D roots in Taiwan. Taiwan can absolutely balance global efficiency and security, continuously deepening the close and prosperous ecosystem between the two sides.
Highlights of the five speakers’ presentations are as follows:
Chris Miller, author of Chip War and professor at the Fletcher School at Tufts University, focused on the strategic level of the U.S.-China AI competition, noting that the United States is highly focused on AGI while China is focusing not purely on AI but areas across the traditional economy from energy capacity to industrial applications. Miller described the two superpowers as having a “different theory of power.” The United States has surged ahead in AI capabilities while China is surging ahead across the traditional industrial economy, and making plays in areas including restricting rare earth materials. The next field of competition will be physical AI systems. Chinese components are increasingly dominating the supply chain for physical AI. Miller urged policymakers to move from dialogue to action. On Taiwan, Miller noted mirroring myths in the U.S.-Taiwan relationship that should be dispelled. On the United States side, Miller disagreed with narratives that Taiwan “stole” U.S. technology to build its semiconductor capacities. History proves Taiwan’s long technological partnership with the United States in technology. In Taiwan, Miller sought to assuage concerns that the United States is “hollowing out” Taiwan. Trade data demonstrates that Taiwan’s booming semiconductor business and strong trade ties with the United States are stronger than ever.
Tarun Chhabra, head of national security policy at Anthropic, observed that frontier labs in the United States are fully aware that winning on software is insufficient, and that the United States must gain a lead in hardware and manufacturing. A way to do that, according to some labs, is for the United States to leapfrog China. At Anthropic, frontier AI is being used to accelerate advances in frontier robotics and manufacturing. On this front, there is a lot of potential that has not been adequately explained. On adversarial distillation, Chhabra said that people tend to focus on what can be done at the end, but a systematic approach is advisable including closing “front door” access whereby Chinese actors can access leading models via Singapore. Anthropic has closed that front door. But distillation is not the only part that matters, Chhabra argued, saying China “can steal the recipe but you still need the kitchen.” The United States should strengthen chip controls and equipment controls to ensure that China’s diffusion is limited. On the Mythos moment, Chhabra said that accelerating adoption of AI for national security is very important, and measures like access controls to models must be adopted. He said that he expects China will gain similar capabilities to Mythos in a matter of months. He warned that China’s continued release of open models will continue to pose a significant risk.
David Feith, Senior Fellow at the Hudson Institute, emphasized that Washington has demonstrated a high degree of bipartisan consensus on its China policy. From the competitive framework of the Trump administration to the continuation of the Biden administration, the current strategic core has shifted to the competition for AI hegemony and supply chain resilience covering key minerals and pharmaceuticals. In this context, ensuring peace and stability across the Taiwan Strait remains central to US policy. Feith reminded that Taiwan, as an irreplaceable global AI hardware manufacturing center, is crucial for the U.S. to achieve AI leadership. Taiwan must avoid underinvesting in defense spending and key manufacturing sectors and recognize the potential for catastrophic aggression from China. Tactical delays in arms sales should not obscure the broader context of both sides jointly confronting the core threat.
Chris McGuire, Senior Fellow for China and Emerging Technologies at the Council on Foreign Relations (CFR), said that while China is striving for semiconductor self-sufficiency, manufacturing cutting-edge chips is an extremely complex undertaking, a national security asset that democratic allies must rigorously protect. Currently, the risk of technology outflow largely stems from smuggling and remote access through third countries. Therefore, it is crucial to draw absolute red lines to prevent China from acquiring AI models of equivalent quality. McGuire called on allies, including Taiwan, to align fully with the United States in enforcement of export control and criminal liability for selling advanced AI chips to China. McGuire predicted that the U.S. Congress is highly likely to introduce new export control legislation this year. Given the “Mythos moment” revolutionizing AI in cyber and national security, for technologies like AI chips, McGuire expected to see more export control action in the future. He urged Taiwan to include export violations in strict criminal prosecution to ensure that technology is not used by China to enhance its military power.
SEMI Taiwan President Terry Tsao, speaking from an industry perspective, urged the United States to show more recognition and empathy towards Taiwanese supply chains operating in the United States. He cited TSMC’s establishment of a factory in the US as an example. While initially facing challenges such as labor costs in cross-border operations, he argued that the upfront investment was acceptable given the learning curve that followed. TSMC also introduced “smart manufacturing” to overcome high overseas costs and precisely control efficiency, demonstrating proactive resilience. Tsao reiterated that in promoting globalization, Taiwan’s semiconductor industry is absolutely capable of perfectly balancing global operational efficiency and supply chain security. He emphasized that the US itself possesses a supply chain ecosystem foundation, like Intel’s ecosystem in Arizona which Taiwanese companies have sought to leverage in building there. Furthermore, he stressed that Taiwan’s supply chain is a microcosm of the global supply chain, and both sides will become closer and more prosperous in the technological ecosystem of the AI era, jointly creating a mutually beneficial situation.
