The latest meeting between US President Donald Trump and Chinese President Xi Jinping has once again put Taiwan at the centre of the world's most consequential geopolitical and technology rivalry.
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meeting → put → rivalry
Xi pressed Trump during their Washington talks to adopt what Beijing calls the "correct position" of opposing Taiwan independence, according to a Chinese readout.
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Beijing → press → readout
Taiwan rejected the demand, saying Beijing had no right to determine the island's future.
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Beijing → reject → future
The exchange came as Washington continues to balance its longstanding support for Taiwan with its broader effort to manage relations with Beijing.
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Washington → come → Beijing
The Taiwan question, however, is about more than territory, military power or competing political claims.
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question → compete → territory
Taiwan produces the overwhelming majority of the world's most advanced chips, with Taiwan Semiconductor Manufacturing Company, or TSMC, at the centre of that ecosystem.
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Taiwan → produce → ecosystem
These chips power smartphones, artificial intelligence systems, high-performance computers, data centres, automobiles and increasingly sophisticated military technologies.
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chips → power → smartphones
As Stanford University Hoover fellow Eyck Freymann told Rest of World, “The economic shock from a serious Taiwan disruption would dwarf anything we’ve seen in the postwar period.”
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we → tell → period
The question is therefore not simply what would happen if China and Taiwan entered a military confrontation.
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China → happen → confrontation
It is why Taiwan became so important to the global chip industry, why TSMC is so difficult to replace, why the company depends on technology and suppliers across several countries, and why the US, China and India are all trying to reshape the semiconductor supply chain.
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US → become → chain
The world’s top semiconductor manufacturers powering everything from smartphones to AI data centres
The island that became a semiconductor chokepoint
Semiconductors are the building blocks of modern electronics.
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Semiconductors → power → electronics
They allow computers to process information, smartphones to function, vehicles to operate sophisticated electronic systems and AI data centres to perform enormous numbers of calculations.
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computers → allow → calculations
But semiconductor manufacturing is not concentrated in one country.
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manufacturing → concentrate → country
The supply chain is divided among economies with different strengths.
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chain → divide → strengths
The US has major capabilities in chip design, software and electronic design automation.
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US → have → design
Taiwan dominates advanced manufacturing.
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Taiwan → dominate → manufacturing
EUV lithography is at the heart of the race to control the world’s most advanced chips
Taiwan's importance comes from the concentration of advanced manufacturing on the island.
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importance → control → island
Government data says Taiwan accounts for more than 60% of global chip production and nearly 90% of advanced chips.
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Taiwan → say → chips
TSMC's scale illustrates why it is difficult to replace.
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it → illustrate → ?
In 2025, the company manufactured 12,682 products using 305 process technologies for 534 customers.
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company → manufacture → customers
Its chips served sectors including high-performance computing, smartphones, automobiles, the Internet of Things and consumer electronics.
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chips → serve → Things
Its manufacturing capacity exceeded 17 million 12-inch equivalent wafers during the year.
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capacity → exceed → year
The company therefore sits between some of the world's largest technology companies and the physical production of their chips.
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company → sit → chips
TSMC sits at the centre of Taiwan’s semiconductor ecosystem and the global advanced-chip supply chain
How Taiwan built its semiconductor advantage
Taiwan's position was built over decades.
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position → sit → decades
In the 1970s, Taiwanese policymakers recognised that the island could not immediately compete with the US and Japan across the entire technology industry.
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island → recognise → industry
Instead, it focused on specialised manufacturing capabilities and technology transfer.
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it → focus → capabilities
The Industrial Technology Research Institute, or ITRI, was established in 1973.
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Institute → establish → 1973
Taiwan subsequently acquired semiconductor technology from the US through licensing arrangements and trained engineers overseas.
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Taiwan → acquire → engineers
The development of the Hsinchu Science Park, established in 1980, added another crucial component.
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development → establish → component
Hsinchu brought together semiconductor companies, research institutions, universities, engineers and suppliers.
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Hsinchu → bring → companies
Over time, this geographic concentration created an ecosystem in which companies could access skilled workers, equipment, suppliers and technical expertise.
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companies → create → workers
The decisive change came in 1987, when Morris Chang founded TSMC.
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Chang → come → TSMC
Chang's idea was to separate chip design from chip manufacturing.
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idea → separate → manufacturing
Instead of designing and selling its own branded chips, TSMC would manufacture chips designed by other companies.
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TSMC → design → companies
The model became known as the pure-play foundry model.
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model → know → model
TSMC's business model allowed companies such as Nvidia and Qualcomm to concentrate on chip architecture and design without having to build and operate their own advanced fabs.
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companies → allow → fabs
At the same time, TSMC could focus entirely on manufacturing.
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TSMC → focus → manufacturing
The model also reduced concerns among customers that their manufacturing partner would compete with them in the chip market.
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partner → reduce → market
TSMC says its exclusive focus on manufacturing customers' products was central to the pure-play foundry model.
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focus → say → model
That division of labour helped create the modern fabless semiconductor industry and made TSMC a central manufacturing partner for some of the world's most valuable technology companies.
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TSMC → create → companies
…and 126 more, not listed.
The Aporia
