DSET participated in the “Chipping In” closed-door event hosted by the Special Competitive Studies Project (SCSP) at its Washington, D.C. metropolitan office. During the session, the DSET delegation presented two new research reports focusing on China’s strategic push in the mature-node semiconductor sector and Taiwan’s roadmap for developing a secure and scalable indigenous unmanned aerial vehicle (UAV) industry.
The DSET delegation included CEO and Director of the Economic Security Group Dr. Jeremy Chih-Cheng Chang, Deputy Director of the Economic Security Group Min-Yen Chiang, Special Contributor Hung-Ta Lin, and Global Fellow Sunny Cheung. The team introduced the reports and engaged in a dynamic Q&A session addressing key topics such as export controls, military preparedness, and cross-border policy coordination.
Report 1: China’s Comprehensive Strategy to Dominate Foundational Chips
Dr. Chang introduced DSET’s latest report titled The Great Siege: The PRC’s Comprehensive Strategy to Dominate Foundational Chips. The report highlights how China is seeking to build a vertically integrated chip ecosystem through heavy state subsidies and policy coordination at both national and local levels, posing a significant challenge to Taiwan’s leading position in mature-node semiconductors.
Hung-Ta Lin noted that China’s domestic chipmakers, often unburdened by the need for profitability, are focused primarily on gaining global market share. These firms leverage China’s strength in end-user product markets to accelerate global adoption of Chinese-made chips.
Min-Yen Chiang elaborated on China’s “pseudo-IDM model,” in which the central government and local authorities orchestrate industrial clusters to replicate the structure of traditional integrated device manufacturers (IDMs). Citing case studies of firms such as Nexchip (SMIC Ningbo), National Silicon Materials, and SICC, Chiang emphasized that China’s objective extends beyond self-sufficiency—it seeks to displace Taiwanese and international suppliers.
Dr. Chang concluded the segment with policy recommendations, including a hybrid strategy of export controls and market denial. He pointed to two key chokepoints still beyond China’s reach: photoresist materials, dominated by Japanese firms, and laser light sources, produced by companies in Japan and the U.S. He urged international partners to limit investment in Chinese “national champions” and to reinvigorate support for non-Chinese legacy chipmakers.
Report 2: Taiwan’s Strategy for Indigenous Drone Development
Sunny Cheung previewed an upcoming DSET report outlining Taiwan’s strategy to develop a resilient domestic drone supply chain. Anchored in Taiwan’s Overall Defense Concept, the strategy divides UAV applications into three phases: intelligence, surveillance, and reconnaissance (ISR) for force protection; electronic warfare for littoral defense; and precision strike capabilities for beachhead scenarios.
Cheung emphasized that despite Taiwan’s strong design and manufacturing foundation, it remains dependent on foreign suppliers for key subsystems like flight control units and encrypted communications. Taiwan’s short-term goal is to achieve a monthly production capacity of 15,000 drones by 2028, with priority placed on cybersecurity, aviation safety, and defense readiness.
To achieve this, the report recommends enhancing U.S.–Taiwan collaboration in co-developing combat-ready platforms, streamlining technology transfer processes, and securing supply chains for critical components.
Q&A Highlights: Industrial Policy and International Coordination
During the Q&A session, participants raised questions about the policy tools available to counter China’s state-backed chip production model, referencing lessons learned from past U.S. actions against Huawei. DSET researchers responded that the current challenge goes beyond any single firm and requires a holistic, multilateral strategy against China’s industrial system.
On the drone front, attendees expressed concern over Taiwan’s recent defense budget freezes. The DSET team acknowledged the fiscal pressures but noted that the executive branch had reallocated funding to sustain the 2028 production goals. They also addressed questions about surge capacity for wartime scenarios, emphasizing that while Taiwan’s UAV industry is still in its early stages, its development is tailored to the island’s distinct maritime defense needs.DSET and SCSP have maintained a long-term partnership, with this event marking the second time a report launch has been held at SCSP’s Washington, D.C. office. In July 2024, DSET hosted its first semiconductor report launch at SCSP’s office. Later, in October of the same year, DSET invited SCSP to Taiwan to participate in an international forum. Most recently, in February 2025, DSET was invited to speak at the SCSP-hosted International Strategic Forum (ISF) Global Summit in Taipei. DSET will continue to strengthen its collaboration with SCSP and other international think tanks focused on technology and national security, working with allied nations to coordinate Taiwan’s international cooperation agenda.