The tiny island country with £142bn industry that powers entire global economy

Taiwan, a 36,000-mile island country in East Asia, is home to a colossal industry worth £142billion. The industry is a powerhouse in the global economy, producing the critical chips that drive everything from our mobile phones and computers to cars and countless other electronic devices. 

The small island is densely populated with around 23.9 million inhabitants and features a diverse landscape with mountains dominating the eastern two-thirds and plains in the western third, where the majority of the population resides.

Taiwan has a rich cultural heritage, with influences from various periods of Chinese, Japanese, and indigenous history and has seen significant development since the mid-20th century, experiencing rapid economic growth and industrialisation known as the “Taiwan Miracle.”

The island now has a robust export-oriented economy, focusing on steel, machinery, electronics, and chemicals manufacturing, with its advanced technology sector, particularly the semiconductor industry, playing a huge role in the global economy.

China views Taiwan as a breakaway province that will eventually come under its control, even threatening military action to achieve reunification, while Taiwan sees itself as a separate entity with its own constitution and democratically-elected government.

As China threatens Taiwan with potential annexation, experts warn that Beijing might exploit Taiwan’s semiconductor industry as a strategic tool to influence other countries politically and economically.

 produces nearly 90% of the world’s most advanced semiconductors, with the majority being manufactured by Taiwan Semiconductor Manufacturing Co Ltd (TSMC).

Taiwan’s ongoing dominance in semiconductor production, which fuels the global economy and plays a pivotal role in the technology supply chain, means that any disruption from a Chinese invasion or attack could lead to major global consequences.

TSMC, the largest semiconductor producer globally, is a key supplier to major companies such as Apple and Nvidia thereby positioning the island as a major player in modern global supply chains, ensuring a huge operation of technological infrastructure worldwide.

Taiwan’s semiconductor industry is projected to grow by 16.5% in 2025, reaching an estimated £142billion, driven by high demand for AI and high-performance computing devices such as servers and data centres, according to the Industrial Technology Research Institute. 

The Institute stated that Taiwan is expected to outpace the global semiconductor industry, which is projected to expand by 12.5% in production value to approximately £506.16billion next year.

Known as “the Silicon Island,” Taiwan’s semiconductor industry is crucial to both the global supply chain and its national economy. 

By producing critical components that the world hugely relies on, the small country ensures that its stability is in the best interest of major global powers to safeguard its national security and maintain its strategic importance on the world stage. 

Semiconductors are the backbone of all computing technology and AI’s capabilities, from advanced data processing to machine learning, heavily rely on the power and efficiency of these tiny chips.

Taiwan’s leading position in semiconductor manufacturing is important not only crucial for current technological advancements but also for the future developments in AI and digitalisation.