Taiwan, the country of computer chips and tapioca balls, is moving away from China, the second-largest economy in the world, which has threatened to annex the democratically elected island if necessary, and toward the United States.
This resulted in the largest computer chip manufacturer in the world, which powers everything from cellphones to medical devices, announcing further investments in the United States last month following encouragement from the Biden administration. In the midst of a worldwide competition to obtain the upper hand in the high-tech sector, a Taiwanese semiconductor business announced shortly after that it was ending its two-decade-long presence in mainland China.
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Taiwan is attempting to lessen its reliance on Beijing and shield itself from Chinese pressure while establishing stronger economic and trade links with the United States, its biggest ally. These reforms come at a time when the rivalry between China and the United States is becoming more intense. This change is also occurring because of China’s lackluster economic growth and the need for international companies to diversify in the wake of the pandemic’s supply chain disruptions.
For the first time since comparable statistics became available at the beginning of 2016, the U.S. overtook mainland China as Taiwan’s top export destination in the first quarter of the year, providing a vivid illustration of the transition. Taiwan’s official data shows that in the first three months, the island exported $24.6 billion worth of commodities to the United States, while mainland China received $22.4 billion.
According to Taiwan’s Ministry of Economic Affairs, the island’s investments in mainland China have decreased to $3 billion last year from a year earlier, the lowest level in more than 20 years. Taiwan did, however, increase its U.S. investments ninefold to $9.6 billion in 2023.
After signing a trade pact last year, Washington and Taipei are currently negotiating the next stage of the agreement. Legislators in the US have also proposed a bill to eliminate double taxation on Taiwanese employees and enterprises operating here.
Assistant Secretary of State Daniel Kritenbrink stated, “Everything is motivated by a desire to build Taiwan’s deterrent capability and their resilience, all in support of maintaining the status quo and deterring China from being tempted to take… action against Taiwan.”
The largest computer chip manufacturer in the world, TSMC, declared last month that it will increase its U.S. investments to $65 billion. This came after the Biden administration promised incentives of up to $6.6 billion, which would enable the company’s Arizona plants to create almost 25% of the most cutting-edge chips in the world by 2030.
In addition to its U.S. investments, TSMC is funding Japan, a country that the United States strongly backs in the area. While Pegatron, another Taiwanese company that creates parts for iPhones and PCs, is investing in Vietnam, Foxconn, a conglomerate best known for being Apple’s primary contractor, is expanding its manufacturing capacity in India.