A trip to Taiwan: chips, drones and dogs in strollers
A few days ago, I was walking through the streets of Taipei and an image that I saw repeatedly was young couples walking little dogs in baby strollers. From the carts, instead of the cries of babies, the fluffy head of a Pomeranian or the playful eyes of a corgi would appear. The scene was tender, but also worrying. In Taiwan, young people are barely having children: in fifty years, the island's population could have been reduced from 23 to 12 million people.
The demographic problem has many facets. But one of the impacts it may have in the future will be on the island's talent, recognized worldwide for its chip industry. This was explained to us by two high-level Taiwanese officials during a trip organized by European analysts in which we were able to speak with institutions and companies in the island's tech world. The main narrative on the part of the Taiwanese government is clear: the European Union and Taiwan must strengthen ties. Increasing cooperation in technology, Taipei asserts, strengthens democracy and the “free world”; Taiwan offers secure and “non-red” (that is, non-Chinese) supply chains; European countries should stop “self-censoring” in the face of pressure from Beijing.
Beyond the proclamations, however, the situation is more complicated. An example is the new military drone industry that Taipei wants to promote as an alternative to the Chinese one. The Taiwanese government wants to replicate the chip model: having American or European companies design the drones, but having their manufacturing done in Taiwan. If the main objective is to reduce dependencies on China, the plan makes sense; at the same time, continuing to manufacture in Taiwan clashes with the West's reindustrialization intentions. Taiwanese drones, moreover, would continue to be more expensive than Chinese ones: for states at war like Ukraine, making this change is complicated. For Taipei, producing drones is not just about diversifying the economy: it is about increasing economic interdependencies and cross-interests with Europe and the United States, and thus increasing its deterrence capacity against Beijing.
The shadow of Beijing
Taipei is at a moment of transition where China's military power continues to grow and support from the United States seems to falter. Taiwanese democracy does not have just one formula for this problem: the current Taiwanese government, of the DPP, may be very clear that cutting ties with Beijing is the best strategy, but the KMT opposition believes that closer ties with the People's Republic would help to reduce tensions. Beyond political divisions, the Taiwanese chip sector continues to hold enormous power: more than 90% of advanced semiconductors are manufactured in Taiwan. A single chip company, TSMC, represents 10% of the island's GDP.
During my walks around Taipei, two other images remained etched in my mind. The first, a park where there were fighter jets and anti-aircraft batteries from the 1958 war between Mao's China and Chiang Kai-shek's Taiwan, during which the United States considered using nuclear weapons against the communists. The second, an election poster for Taiwan's upcoming local elections featuring former President Tsai Ing-wen petting a cat she was holding in her arms.
