Made in Taiwan

Gareth Walsh


Made in Taiwan

As an 8-year-old boy, growing up in the mid-eighties, I would sometimes glance at the underside of my Tonka Truck and see the words “Made in Taiwan” moulded into the plastic underbelly of my famously indestructible toy and wonder what that foreign word was. It wasn’t just Tonka, or even toys, “Made in Taiwan” seemed to appear on multiple items, and hence stuck in my memory.  In all honesty I didn’t know if Taiwan was a country or a factory in Athlone or Alabama, it was just another word I didn’t know!


(For those interested, American firm Tonka was part of Hasbro plc until 2020, when they were sold to private firm “BasicFun!”)


Fast forward some 35 plus years and Taiwan is still a manufacturing powerhouse, that has moved with the times. It is now a market leader in the semiconductor industry, producing tiny microchips that are used in multiple aspects of everyday life. These microchips are the key components in smartphones and computers as you would expect, but also cars and public transport, food production, fighter jets and missiles, even my home alarm and doorbell now have multiple semiconductors!


Taiwan Semiconductor Company Limited, is, by value, the world’s largest semiconductor company and the world’s largest pure play on semiconductors with revenue of $85.13bn in 2020*. It is a holding in our Global Equity Income fund along with other semiconductor favourites, Analog Devices and Texas instruments.


Moore’s Law is an observation that the number of transistors in an integrated circuit doubles about every 2 years. This is a fancy way of saying that, as time goes on, devices become more complex, faster, smaller and more compatible with each other.


The semiconductor industry became a microcosm of the supply chain problems caused by Covid-19. Notably in the auto industry, where microchip shortages caused massive supply shortages, feeding through into the second-hand car market and helping fuel the inflation we see today. From the beginning of 2021, 2nd hand cars have increased more in value than cryptocurrencies!


In August this year, President Joe Biden signed a rare bipartisan bill that aims to strengthen U.S. competitiveness by investing billions of dollars in domestic semiconductor manufacturing and science research. Dubbed the “Chips and Science Act”, it includes more than $52 billion for U.S. companies producing computer chips, as well as billions more in tax credits to encourage investment in semiconductor manufacturing. It also provides tens of billions of dollars to fund scientific research and development, and to spur the innovation and development of other U.S. tech. It is such a valuable area, that US Republicans and Democrats actually managed to agree on something – that they need to strengthen their domestic industry to catch up with the Asian industry leaders.


Going back to Taiwan, it is still key to supplying the world with semiconductors, and the global economy is dependent on them for the near future. Of course, both Beijing and Nancy Pelosi know this, making the recent escalation of military activity even more scary. Sadly, gone are the days when military drills were rightly assumed to be just muscle flexing. What we have seen with Natural Gas and grain after Russia’s horrific invasion of Ukraine, we could see replicated with microchips if China does invade Taiwan. It goes without saying that the human price would be catastrophic as well. Taiwan has very strong ties to Japan and South Korea, both of whom could easily be drawn into any conflict if their near neighbour was invaded.


I’m not a scholar of South Asian history but I learned a few facts on a recent site visit to (of course) a semiconductor plant in Limerick. The passenger behind me on the coach had lived in Taiwan, had married a Taiwanese lady, and he educated me on the relationship with China.


Taiwan is officially called the “Republic of China” and is run by descendants of the losers of the Chinese civil war in 1949. The war was won by the Chinese Communist party lead by Mao, whose party is still in control of what we call China, officially the “People’s Republic of China”. If not so serious, it would spark memories of the “People’s front of Judea” of Monty Python fame.


Fingers crossed that cool heads prevail.


*Source: (


Gareth Walsh is a Senior Portfolio Manager at Cantor Fitzgerald Ireland.



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