An analysis has found that Taiwan’s export engine will remain strong for the foreseeable future, backed by its sophisticated semiconductor ecosystem and mature foundry (contract manufacturing) model. However, some experts warn that geopolitical risks and the heavy concentration on foundry could become challenges for long-term growth.
On the 10th, Liu Da-Nien, director of the Regional Development Research Center at the state-funded Chung-Hua Institution for Economic Research (CIER), said in an interview with Maeil Business Newspaper, “Global digital transformation and advances in artificial intelligence (AI) are driving continuous growth in demand for data centers, high-performance computing (HPC), and AI semiconductors.” He added, “The semiconductor industry is highly likely to maintain long-term growth,” stressing, “Given Taiwan’s importance in the global semiconductor supply chain, the Taiwanese economy is expected to reap substantial benefits.”
Liu also noted that the recent upward revision of this year’s economic growth forecast by Taiwan’s Executive Yuan to 7.71% should be seen in the same context. “The higher forecast reflects stronger-than-expected recovery in exports, investment, and the technology sector,” he explained, adding, “The recent trend of increased investment by semiconductor companies is another factor supporting Taiwan’s economic growth.”
He cited four core strengths of Taiwan’s semiconductor industry: technological leadership, manufacturing capabilities, industrial cluster effects, and its business model. “Taiwan has maintained a leading position for years in advanced process and packaging technologies, enabling it to fully meet demand for high-performance semiconductors used in AI and HPC,” he said. “Taiwanese companies have accumulated manufacturing experience and management capabilities over a long period, giving them strong advantages in yield, reliability, and large-scale mass production.”
He further pointed to the industrial cluster effect that spans design services, materials, equipment, packaging and testing, and system integration, along with the stability of the pure foundry business model, as unique competitive strengths. At the same time, he cautioned, “International trade and geopolitical uncertainties, as well as economic conditions in major economies, are key variables,” adding, “Since last month’s strikes by the United States and Israel on Iran, these uncertainties could grow even larger.”
In contrast, some argue that Taiwan’s foundry-centered industrial structure could ultimately work against it. Kim Yang-paeng, a senior researcher at KIET, remarked, “Aside from foundries, Taiwan has virtually no competitive edge in memory semiconductor companies or related fields,” and assessed, “From the perspective of the overall economy, being overly concentrated in a single industry is not a good thing.”
Its vulnerability to geopolitical risks is also seen as a major limitation. Kim noted, “Issues in cross-Strait relations between China and Taiwan could pose a significant risk factor for Taiwan’s economy.”
He also pointed to the shortage of specialized semiconductor talent as another challenge that must be addressed. “Taiwan’s talent development system is actually better structured than South Korea’s,” he said, “but people in their 20s and 30s in Taiwan are increasingly reluctant to accept the heavy workloads at Taiwan Semiconductor Manufacturing Company Limited (TSMC).” He added that frequent earthquakes are another environmental burden.
Meanwhile, domestic experts stressed that South Korea’s semiconductor industry needs to move beyond its traditional memory-centered structure and diversify its areas of competitiveness.
Jonghwan Lee, Professor of System Semiconductor Engineering at Sangmyung University, said, “South Korea still has a strongly memory-centered structure, so its foundry competitiveness is relatively weak.” He argued, “The government and companies must work together to strengthen the industrial ecosystem through the development of the Yongin Semiconductor Cluster, tax incentives, increased investment, and talent cultivation.”
Moon Song-cheon, emeritus professor at the KAIST College of Business, noted, “Looking at the structure of the semiconductor industry, value added rises as you move up from High Bandwidth Memory (HBM) and graphics processing units (GPU) to Operating System (OS) and database (DB).” He emphasized, “In particular, securing software capabilities such as OS is crucial to enhancing the competitiveness of South Korea’s semiconductor industry.”
Hsinchu, Taiwan – Correspondent Gwangseop Song / Seoul – Reporter Sumin Lee
2026-03-11