The intensifying U.S.-China technology rivalry is accelerating the restructuring of global semiconductor supply chains and increasing scrutiny of TSMC’s expanding investments in the United States. According to Roy Chun Lee, Senior Deputy Executive Director of the Center for International Trade Policy at the Chung-Hua Institution for Economic Research (CIER), this rivalry has evolved into a systemic strategic contest that extends beyond individual industries. China is actively pursuing self-sufficiency throughout its semiconductor ecosystem, although its overcapacity issue is unlikely to diminish in the near term. Taiwan occupies a pivotal position in U.S.-led supply chain integration. While supporting the development of U.S. semiconductor manufacturing capacity, Taiwan must also safeguard its indispensable status within global supply chains.
China Accelerates Semiconductor Self-Sufficiency Amid Persistent Overcapacity Challenges
TSMC is evaluating capacity expansion beyond Arizona, with Texas among the potential locations. Lee noted that the United States and China are engaged in technological and economic competition across sectors such as semiconductors, aerospace, and other high-tech industries. China is actively acquiring technology and expertise from the United States and its allies to enhance its industrial competitiveness.
Lee explained that China is pursuing industrial self-sufficiency through three primary strategies: supporting national champion industries while expanding into overseas markets, promoting import substitution, and implementing policy measures to direct domestic consumption toward locally produced goods. Semiconductors represent a central focus in China’s self-sufficiency efforts. The country is rapidly increasing production capacity and developing a comprehensive industrial ecosystem. Consequently, overcapacity is a structural outcome of these industrial policies and is unlikely to abate in the short term.
Deepening Taiwan-U.S. Semiconductor Cooperation Necessitates Balancing Overseas Expansion with Domestic Competitiveness
Lee cautioned that the United States is actively integrating its allies into a relatively independent technology and economic system, with Taiwan playing a central role. Increased U.S. investment by Taiwanese companies also reflects the importance that Washington attaches to Taiwan’s semiconductor manufacturing capabilities. The United States hopes to leverage Taiwan’s technological and industrial strengths to accelerate the development of its own semiconductor industry.
However, competition in advanced semiconductor manufacturing must balance supply chain security with production efficiency. If TSMC’s U.S. investments substantially increase operating costs and reduce corporate profits and R&D resources, they could weaken Taiwan’s technological lead and allow China to narrow the gap. Taiwan-U.S. cooperation should therefore consider not only the distribution of production capacity, but also companies’ long-term competitiveness and R&D capabilities. Excessive cost burdens must not undermine the industry’s momentum for innovation.
TSMC’s U.S. Expansion Challenges Supply Chain Strategy as Talent and Cost Management Become Critical
Lee noted that TSMC’s Arizona operations face a shortage of local technical talent. Semiconductor fabrication plants require skilled professionals willing to work rotating and overnight shifts, yet some midsize U.S. cities struggle to attract highly educated workers. Securing an adequate talent pool will therefore be a major challenge for overseas capacity expansion.
Taiwan’s involvement in the restructuring of global semiconductor supply chains should not be limited to the scale of overseas investment. More critically, Taiwan must maintain its advantages in technology, talent, and industrial clusters. By remaining indispensable to global supply chains and balancing overseas expansion with domestic industrial development, Taiwan can sustain its long-term industrial competitiveness and strategic value amid U.S.-China technology competition and ongoing supply chain restructuring.
Source: Commercial Times (November 7, 2026). As TSMC Expands U.S. Footprint, Experts Say Taiwan’s Irreplaceable Supply Chain Is Key to Defending Its Edge.https://www.ctee.com.tw/news/20261107700013-430501