Taiwan

Taiwan built the world's most strategically important industry through deliberate state planning, borrowed expertise, and geographic necessity—creating a "silicon shield" that makes its conquest economically unthinkable for any power that wants to keep making advanced electronics.

The Kuomintang fled mainland China in 1949, arriving in Taiwan as refugees with $4 billion in American aid and lessons learned from losing a civil war. Unlike the landlord class they'd protected on the mainland, KMT officials in Taiwan had no local property interests. This enabled radical land reform: the "land-to-the-tiller" program of 1953 broke up large holdings and distributed land to tenant farmers, creating a class with capital to invest and stake in the system.

American aid continued through 1965—$4 billion in soft credit and development assistance, plus another $41 billion in free aid through 1975. The economy shifted from agriculture (32% of GDP in 1952) to industry (47% by 1986). Growth averaged 8.7% annually from 1952 to 1982. Taiwan became one of the Four Asian Tigers, following Japan's export-oriented industrialization model.

The semiconductor bet came in the 1970s. The Industrial Technology Research Institute, founded in 1973, developed domestic technology capacity. The Hsinchu Science Park opened in 1980 as a dedicated semiconductor zone with infrastructure, utilities, and transport. Then came the crucial decision: recruiting Morris Chang, a Chinese-born, American-trained semiconductor executive, to build something new.

Taiwan Semiconductor Manufacturing Company, founded February 21, 1987, pioneered the "foundry model"—manufacturing chips designed by other companies rather than competing with them. This was strategic genius. Instead of challenging Intel or Samsung as a rival, TSMC became essential infrastructure for Apple, Nvidia, AMD, and dozens of other firms. Companies could design chips without building factories; TSMC would fabricate them.

Today, TSMC manufactures roughly 90% of the world's most advanced semiconductors. No other company can produce chips at the 3-nanometer and 5-nanometer scales that power AI systems, smartphones, and advanced military equipment. This concentration is Taiwan's "silicon shield"—the theory that China cannot invade without destroying capacity that China itself depends upon, and that the United States would intervene to protect.

The vulnerability is obvious: 90% concentration of critical manufacturing on an island 100 miles from a hostile power creates catastrophic risk. TSMC is building fabs in Arizona and Japan, but advanced production will remain Taiwan-concentrated for years. The 2025 challenge is sustaining technological leadership while China's SMIC advances and American industrial policy subsidizes onshoring.

By 2026, geopolitical tension will intensify around the Taiwan Strait even as TSMC extends its process leadership. The company that made Taiwan essential to global technology now makes Taiwan the most contested geography on Earth—a silicon shield that works precisely because its destruction would be mutually catastrophic.