Cathy Fang, Policy Analyst at the Research Institute for Democracy, Society, and Emerging Technology (DSET), recently joined Channing Lee, Director of Global Partnerships at the Special Competitive Studies Project (SCSP), on Taiwan Talks, a programme produced by Taiwanese media outlet TaiwanPlus. The discussion explored the U.S.–China technology competition, semiconductor export controls, China’s supply chain strategy, and Taiwan’s strategic position in the global artificial intelligence and semiconductor landscape.
Fang noted that the objective of U.S. technology controls is not to stop China’s development entirely, but to raise the costs of acquiring technology and building domestic manufacturing capacity. By slowing China’s progress, these measures can buy time for democratic countries to preserve their technological lead. She stressed that export controls cannot focus solely on restriction; they must also be accompanied by industrial promotion, technology investment, allied coordination, and stronger supply chain resilience.
She explained that semiconductor supply chains are highly internationalised. The United States holds important advantages in software, intellectual property, and electronic design automation tools, while Japan, the Netherlands, Germany, and South Korea play key roles in critical materials, lithography equipment, optical components, and high-bandwidth memory. Taiwan, meanwhile, remains at the centre of advanced manufacturing. While China benefits from its vast market and manufacturing base, one of the United States’ most important advantages is its network of allies, which allows it to coordinate control over critical supply chain chokepoints.
Fang also cautioned that, although governments are increasingly aligned at the strategic level, many companies remain highly dependent on the Chinese market. Revenue generated in China continues to support research and development for some Asian and European firms. How governments narrow the gap between strategic policy and commercial interests, while establishing effective communication and supporting measures, will directly affect the effectiveness of export controls.
Responding to a case raised by the host involving Nexperia, Fang said that policymakers have often focused too heavily on advanced processes such as two- and three-nanometre chips, while underestimating the strategic importance of mature-node semiconductors. These chips are widely used in automobiles, consumer electronics, and infrastructure. If China gradually gains control over this capacity through acquisitions, technology transfers, and vertical integration, democratic countries could develop new dependencies in essential industrial supply chains.
The programme also discussed China’s intervention in Meta’s proposed acquisition of AI start-up Manus. Lee explained that the case suggests Beijing may continue to view companies as part of China’s technology ecosystem even after they relocate their headquarters overseas. Fang added that China’s technology controls are expanding beyond restrictions on foreign technology entering the country to tighter oversight of domestic talent, capital, and technology moving abroad. This reflects Beijing’s growing treatment of artificial intelligence as a critical national strategic asset.
Turning to Taiwan’s future, Fang emphasised that the country’s semiconductor advantage lies not only in the low cost, but also in the reliability and predictability created by its highly integrated industrial clusters. However, as advanced manufacturing and packaging capacity continue to expand, Taiwan must address challenges involving water, electricity, infrastructure resilience, and talent supply.
On concerns that overseas investment could “hollow out” Taiwan’s semiconductor industry, Fang argued that such expansion should be understood as a “Taiwan plus one” strategy rather than a replacement for Taiwan’s core capabilities. Taiwan should make strategic use of its importance and deepen cooperation with like-minded partners, while avoiding the weaponisation of supply chains. Instead, it should continue strengthening its international reputation as a trusted, stable, and reliable partner.
