Structural Adjustment of the Semiconductor Industry in the Taiwan Region: Historical Evolution and Global Supply Chain Shifts

Shawnigan Lake School, 1975 Renfrew Rd. Shawnigan Lake, BC, Canada

^* Corresponding author: mhuang@shawnigan.ca

Abstract

Semiconductors power modern electronics and critical technologies, from smartphones and electric vehicles to artificial intelligence and defense systems. Taiwan’s semiconductor industry occupies a central position in this global ecosystem, far exceeding its geographic size. This paper examines how Taiwan developed into a semiconductor hub through state-led industrial policies, international technology transfers, and a distinctive fabless–foundry model that enabled rapid specialization. Today, Taiwan leads in advanced chip manufacturing, supplying top global firms. However, growing geopolitical tensions, supply chain disruptions, and rising costs have pressured the industry to adapt. Strategic responses include overseas capacity expansion, greater supply chain diversification, and deeper partnerships to enhance resilience. These structural adjustments not only affect Taiwan’s own economic security but also influence the stability of global technology networks. Taiwan’s experience reveals key lessons for how critical industries can build long-term competitiveness and adapt to a more fragmented and uncertain era of globalization. This study contributes to a deeper understanding of industrial transformation in a strategically vital sector facing mounting global pressures.