The Most Dangerous and Influential Industry in History

From now on, and for the next few years, the United States and others, including its AI industry, have no choice but to rely almost entirely on Taiwan for chip production. This raises the question we previously addressed in an earlier article: why depend on a small country with a population of no more than 23 million, a relatively small land area, and recognition by only 11 countries, while remaining vulnerable to invasion at any time? The flourishing of AI in the United States, driven by giant companies such as NVIDIA, AMD, and Google, heavily depends on Taiwan for the design and mass production of highly advanced semiconductors, thanks to decades of accumulated manufacturing expertise there.

It is extremely difficult to ramp up chip production overnight due to a combination of engineering complexity, exorbitant costs, and the absence of a domestic supply chain infrastructure. Taiwanese companies completely dominate the most advanced technologies, with TSMC producing more than 90% of the world’s high-performance and most advanced chips. Taiwan has not only built factories but also established an integrated ecosystem, where hundreds of suppliers specializing in chemicals, specialized equipment, and packaging operate in extremely close proximity. This interconnected network allows its companies to rapidly develop their technologies and maintain unmatched efficiency.

Advanced semiconductor manufacturing is the most complex and precise industrial process in human history. Several major obstacles currently prevent expanding production beyond Taiwan. These are not just the high costs, long timelines, and the expense of building even a modest-sized factory, which ranges from $20 to $30 billion, along with the time required for production. It also takes a long time to build factories and prepare ultra-clean rooms and other facilities. Therefore, production capacity cannot be quickly increased to meet sudden demand surges, such as those currently seen in the AI sector.

The bottleneck in this industry lies in the highly complex machinery required for production, which is not available as an off-the-shelf product. The world’s most advanced chips require extreme ultraviolet (EUV) lithography machines, which are manufactured by only one company in the Netherlands, ASML. Each machine costs over $350 million, and there is a long global waiting list to obtain them. Moreover, understanding the theoretical physics needed to design an electronic chip is entirely different from the actual ability to mass-produce millions of them with zero defects. These chips contain tens of billions of transistors stacked on a piece of silicon smaller than a postage stamp, with component dimensions measured at the atomic scale.

TSMC has spent decades refining its manufacturing “recipes” and training its workforce to achieve high and consistent yield rates. Replicating this institutional “craftsmanship” and culture of precision in a new geographic region requires training generations of technicians. The challenge is not merely about providing capital. Operating an electronic chip fabrication plant (fab) also requires a massive, highly specialized workforce of engineers and technicians proficient in materials science and semiconductor physics. Furthermore, these factories consume enormous amounts of ultra-pure water and uninterrupted electrical power, necessitating intensive coordination at both local and federal levels—a process that is notably slower in the United States compared to East Asian countries.

Recognizing its strategic vulnerability, the U.S. government has enacted legislation on semiconductors and science to provide financial support for domestic manufacturing. Currently, companies such as TSMC, Intel, and Samsung are building large-scale fabrication plants in states like Arizona, Texas, and Ohio. However, operating these factories at full capacity to match the scale of operations in Taiwan, along with achieving comparable cost efficiency and extreme precision, will be a marathon that takes decades. The billion-dollar question: How did Taiwan, despite all its obstacles, achieve this advanced scientific position? Ahmed Al-Sarraf