In recent years, “chip diplomacy” has become a focal point of international media attention. As Taiwan’s semiconductor industry actively expands overseas, its foundry, packaging, testing, and IC design capabilities rank among the world’s top tier. Countries including the United States, Japan, Germany, India, and Singapore are competing to invite collaboration, making Taiwan’s strategic position in the international supply chain increasingly critical. Kristy Hsu, Director of the Taiwan ASEAN Studies Center (TASC) at the Chung-Hua Institution for Economic Research (CIER), notes that this wave of overseas deployment not only enhances industrial resilience but also creates multiple opportunities in diplomacy and economic trade.
Leveraging Industrial Advantages in Conjunction with the New Southbound Policy
Director Kristy Hsu cautions that “chip diplomacy” offers no universal solution to diplomatic challenges. Without comprehensive planning and supporting measures, it may lead to concerns about industrial outflow and technology spillover. The government’s recent brief implementation and swift reversal of chip export controls targeting South Africa precisely reflects Taiwan’s sensitivity and limitations when utilizing technology as a diplomatic instrument.
Chip diplomacy can serve as a vital tool for deepening international cooperation. However, it must be implemented in conjunction with policies such as the “Digital New Southbound” initiative to strike a balance between supply chain security and investment interests. Director Kristy Hsu emphasized that the government should utilize negotiation mechanisms to help companies secure maximum economic and diplomatic benefits while maintaining technological leadership. Only then can Taiwan solidify its advantages in the global competitive landscape.
Author: CIER Editorial
Team Date: October 9, 2025