Dr. Chih-Cheng Chang, CEO of DSET, was recently featured in an in-depth interview by PwC Japan, a subsidiary of one of the world’s Big Four accounting firms. The discussion, led by Executive Director Kimihiko Uchimura and Manager Tomofumi Yoshida, focused on the latest developments in Taiwan’s semiconductor strategy and growth paths that Japanese enterprises should pursue in the evolving geopolitical landscape.
Strategic Reorientation in the Era of Economic Security
PwC Japan, which has long been dedicated to analyzing semiconductor trends, technology innovation, and corporate strategies, emphasized the dual pillars of economic security: defensive and offensive. The Trump administration’s first term initiated this shift, framing all economic activities within a security context, pushing for decoupling from China and urging allies to reassess their economic ties with Beijing.
In this context, Taiwan’s semiconductor sector has drawn significant global attention. Dr. Chang outlined Taiwan’s strategic response, which includes two major legal revisions in 2022: an amendment to the National Security Act defining “national core technologies,” and a revision of the Act Governing Relations between the People of the Taiwan Area and the Mainland Area. These changes introduced a more stringent review process for technology transfers and investments in China and empowered authorities to crack down on talent poaching and unauthorized technology acquisition by Chinese entities.
Semiconductors as Strategic Assets
PwC Japan highlighted that the Trump administration’s industrial policies laid the foundation for onshoring advanced semiconductor manufacturing. The Biden administration’s CHIPS and Science Act reinforced this approach, prompting global powers including Japan and the EU to court Taiwanese firms for local production.
Dr. Chang noted that these developments underscore a strategic reclassification of semiconductors—not merely as commercial products, but as critical assets tied to national and economic security. He emphasized that TSMC’s major investment expansion in the U.S. in March 2025 represents Taiwan’s proactive step toward reinforcing bilateral interdependence, while maintaining a balance between economic rationality and national security.
Taiwan’s N-1 policy, which mandates one-generation-behind technology transfers to China, is currently enshrined only in the cross-strait regulations. However, Dr. Chang indicated that future applications of this policy may extend to other nations. This was echoed in a March 2025 legislative inquiry, where National Development Council Minister Jing-Ching Liu confirmed that the policy also applies to U.S. investments, signaling a broader strategic shift.
U.S. Collaboration and Supply Chain Resilience
Dr. Chang stressed that tighter collaboration between Taiwan’s semiconductor firms and Silicon Valley could forge new supply chains vital for emerging technologies such as AI, cloud computing, and quantum computing—fields where the U.S. leads globally. At the same time, safeguarding Taiwan’s unique semiconductor ecosystem, built on decades of expertise and supported by thousands of specialized suppliers, aligns with the strategic interests of many nations, including the U.S.
The potential erosion of Taiwan’s dominance in semiconductors could enhance China’s influence over foundational technologies. For both Taiwan and the West, instability in advanced chip supply would be a significant strategic vulnerability.
Japan’s Role and Bilateral Cooperation Opportunities
In the dialogue, Japanese experts highlighted the importance of standardization and customization over the next decade in the semiconductor field. With domestic fabs under development in Hokkaido and cooperative ventures with Taiwanese foundries in Kyushu, Japan is working to meet market needs, particularly in the automotive sector—one of its core strengths.
Both experts noted the dominance of Chinese firms in the global drone market. However, a potential Japan-Taiwan-U.S. alliance could offer a viable non-Chinese alternative. This is especially critical for Taiwan, which, due to its island geography, must develop a secure domestic UAV supply chain. The Ministry of Economic Affairs launched the “Taiwan Excellence UAV Overseas Business Alliance” in September 2024 to accelerate such initiatives.
Yet, Taiwan’s SMEs face cost disadvantages, with manufacturing expenses often 3 to 10 times higher than Chinese competitors. Japan, too, has many drone-focused SMEs. By leveraging Kyushu’s ecosystem, a Japan-Taiwan UAV collaboration could deliver mutual strategic benefits.
Toward a Japan-Taiwan Strategic Semiconductor Alliance
Executive Director Uchimura highlighted the insights of former U.S.-Japan Semiconductor Agreement negotiator Tsugio Makimoto, who assumed a PwC advisory role in May 2025. Makimoto emphasized the importance of Japan seizing control of downstream applications, particularly in robotics—a key national competency.
Dr. Chang concurred, noting that scaling R&D into mass production—especially in regional healthcare—could be accelerated by linking Japanese innovations with Taiwan’s EMS firms to access the U.S. market. Such collaboration reflects a shared strategic goal: decoupling from Chinese dependence while enhancing supply chain resilience.
In conclusion, Dr. Chang affirmed that strengthening Taiwan-Japan cooperation in semiconductors not only advances industrial complementarity but also serves as a crucial pillar of regional security in the Indo-Pacific.
