Taiwan advances chip diplomacy with US and EU amid domestic and international pressures

Taiwan leverages its semiconductor industry not only as an economic asset but also as a diplomatic tool, intensifying cooperation with the US and Europe while maintaining its technological sovereignty amidst shifting global alliances.

Taiwan used SEMICON Taiwan to present its semiconductor industry as both an economic asset and a diplomatic instrument, positioning the island as a dependable supplier for artificial intelligence supply chains while pressing ahead with efforts to broaden international cooperation. President Lai Ching-te told trade show sessions that Taiwanese firms were expanding overseas to “let resilience create shared prosperity”, while Taiwan’s chip advantage rested on “democracy and rule of law”. Foxconn chairman Young Liu also argued that manufacturers should think in terms of making with Taiwan in the market country, rather than simply making in Taiwan.

The message was reinforced by fresh detail on Taiwan’s arrangements with the United States. Taiwan’s economy minister, Kung Ming-hsin, said at the opening of the US pavilion that Taiwanese companies were preparing an additional $20 billion of investment in the US. Tom’s Hardware reported that Taipei has also rejected Washington’s proposal to shift a large share of semiconductor production to American soil, with Vice Premier Cheng Li-chiun insisting that future overseas expansion would not come at the expense of domestic capacity. In her account, growth abroad would move in step with expansion at home.

That position underlines a broader effort to preserve what many commentators describe as Taiwan’s “silicon shield” while still accommodating foreign political and commercial pressure. According to Tom’s Hardware, the recent US-Taiwan deal involves a very large commitment by Taiwanese firms to invest in US semiconductor manufacturing, AI and energy sectors, but Taiwan says it will keep its most advanced technology on the island and retain a larger total production base than any other country. Bill Frauenhofer of the US Department of Commerce called the partnership “phenomenal”, reflecting Washington’s interest in bringing more chip-related investment onto US soil.

Europe was also prominent in Taipei’s outreach. The European Commission said it organised the second Europe-Taiwan Semiconductor Industry Dialogue in Taipei on 31 August, alongside the European Economic and Trade Office, with support from the EU-funded ChipDiplo consortium. The event brought together companies and research bodies from both sides to discuss semiconductor and AI cooperation. At the French pavilion, Taiwan’s deputy foreign minister, Francois Wu, stressed shared democratic values and a rules-based international order, saying “we use technology to connect with the world, not to control it”. The overall strategy is clear: Taiwan is trying to turn its chipmaking strength into deeper commercial ties and more durable political backing, particularly with the US and the EU.