The logic of globalization was once to maximize efficiency. The logic of competition today is to minimize risk. As supply chains shift from "lowest cost" to "most reliable," the nature of economic competition has fundamentally changed.
The intensifying U.S.-China trade and technology war is rewriting the basic rules of global supply chains. Tariffs can be negotiated and orders redirected, but technology controls, standard-setting, and supply chain restructuring are becoming institutionalized. Taiwan should not mistake this for a temporary disruption before things return to normal. This is a permanent new condition — a managed competition that will define the strategic environment for the foreseeable future.
The Threat to Key Industries
In this context, the question is not which side to choose. It is one of prioritization: which interests are worth pursuing, which risks must be avoided, and which capabilities must never be allowed to erode.
Semiconductors are the clearest example. Advanced manufacturing has placed Taiwan at the center of global technology competition, but what makes Taiwan genuinely irreplaceable is not any single company. It is the tightly coupled industrial ecosystem surrounding that company — equipment maintenance, materials supply, packaging and testing, design services, and a dense concentration of engineering talent. If these elements are gradually relocated under capital and policy pressure, Taiwan may retain some production capacity while losing its status as a true technology node. Presence in the supply chain is not the same as indispensability within it.
Artificial intelligence presents a different risk structure. In the short term, demand for AI servers and high-performance computing is generating substantial orders and growth momentum for Taiwan. But if Taiwan remains confined to hardware manufacturing — unable to move up into systems integration, model applications, or industry-specific solutions — it will be pushed back to the middle of the value chain. With the United States controlling platforms and standards, and China developing applications at scale, Taiwan risks being squeezed out entirely if it cannot establish its own application ecosystems and data advantages.
Beyond Manufacturing: The True Value Of The Supply Chain
Electric vehicles follow a similar pattern. Taiwan holds real strengths in power components, automotive electronics, and key parts. But overall industry control remains with vehicle brands and systems platforms. Without a move toward systems integration and critical module development, Taiwanese suppliers will remain in the "replaceable vendor" category — and when geopolitical or cost conditions shift, they can be substituted far faster than most anticipate.
Biotechnology may appear more removed from geopolitical competition, but it is equally shaped by institutional rivalry. From vaccines and drug development to medical data governance, the sector turns on regulatory standards, cross-border data flows, and industrial protection frameworks. Without building regulatory advantages and clinical trial capacity, Taiwan's technical potential in this field will struggle to translate into scalable industrial value.
Energy security, meanwhile, is the foundational constraint for all of the above. As AI data centers and semiconductor fabrication drive electricity demand sharply upward, a reliable power supply has moved from a cost item to a make-or-break variable. Grid stability, energy mix, and regulatory design will directly influence whether companies commit to long-term investment in Taiwan. Unresolved energy constraints will ultimately offset every other high-technology advantage the island holds.
Across all five sectors, the common thread is this: real competition is no longer about any single technology. It is about systemic capability and institutional conditions.
A Tiered Strategy For Global Engagement
Taiwan's path to maximizing its economic position in the great-power contest is therefore not broad expansion, but precise reorientation.
Toward the United States, Taiwan should treat the relationship as a high-value market and institutional anchor — capturing premium orders and technology partnerships — while avoiding excessive concentration of capacity and capital that creates dangerous policy dependence.
Toward China, Taiwan should move to a model of limited engagement and active risk management, preserving non-sensitive commercial ties while drawing firm lines around critical technologies, core data, and advanced manufacturing.
Toward the broader global market, Taiwan should build a tiered strategy — using Southeast Asia and India to extend manufacturing capacity, engaging Europe through high-standard supply chain participation, and ensuring no single market becomes a source of systemic vulnerability.
Most critically, Taiwan must redefine what it means to keep capabilities at home. Not every industry needs to remain local, but every irreplaceable capability must be institutionally anchored in Taiwan — critical technologies, research and development depth, supply chain integration capacity, and talent density. Once these foundations are loosened, overseas expansion will not strengthen Taiwan's position; it will hollow it out.
Reliability Under Pressure
The real dividing line, however, is not at the industry level. It is in the logic of decision-making.
If policy continues to treat short-term order volumes and investment figures as the primary success metrics, Taiwan will accumulate risk behind a facade of growth. Only when national security risks are quantified — when market concentration, technology outflow, and supply chain dependency are built into the policy framework — can Taiwan find a sustainable balance between expansion and security.
Great-power competition is not a multiple-choice question. It is a stress test — not only of industrial competitiveness, but of an entire economy's capacity to absorb uncertainty.
As global competition shifts to the dimensions of trust and manageable risk, what becomes genuinely scarce is not production capacity. It is the ability to remain reliable under pressure. If Taiwan can institutionalize that ability, its risks will convert into a premium. If it cannot, growth itself will become an amplifier of vulnerability.
The final question is not how severe the external pressures are. It is whether Taiwan is mistaking its current position for a durable advantage. A node that cannot control its own risks is, in the end, a node that can be replaced.
*The author is an adjunct professor at the College of Management, Tunghai University. （Related： Opinion | Financial Warfare: Why Japan Might Short The Global Oil Market ｜ Latest ）
