Taiwan: Aiming to Become a Global Supply Chain Centre in Six Key Industries

Taiwan is on a transformative journey to establish itself as a pivotal player in the global supply chain landscape, with a keen focus on six strategically selected industries. This ambition, articulated by Lin Der-Sheng, the Director General of the Ministry of Economic Affairs’ Industrial Development Administration, highlights the country’s commitment to enhancing its competitiveness on the world stage.

The Semiconductor Industry at the Core

At the heart of Taiwan’s economic fabric lies the semiconductor industry. Offering cutting-edge technology crucial for a myriad of applications—ranging from advanced computing to aerospace and consumer electronics—semiconductors play a foundational role in Taiwan’s strategy. As of 2023, Taiwan holds a formidable position in the global semiconductor market, with its total output value ranking second worldwide, trailing only the United States.

The statistics are telling: Integrated circuit (IC) design alone is valued at $35.2 billion, also claiming the second position globally. Furthermore, Taiwan leads the world in foundry services, demonstrating its dominance with an impressive output of $80 billion.

Growth in Biomedical Innovation

Taiwan’s biomedical sector comprises five vital sub-industries: applied biotechnology, pharmaceuticals, medical devices, digital health, and healthcare solutions. In 2023, this industry generated around $23.3 billion in revenue, showcasing Taiwan’s dedication to health and technology. Approximately 2,500 companies and institutions contribute to innovative R&D, while around 2,600 specialize in customizable manufacturing. Clinical research is further supported by 260 centers and hospitals committed to high-quality outcomes.

This ecosystem not only fuels domestic advancement but also positions Taiwan as a potential leader in global health-related supply chains.

Machinery Tools: The Backbone of Exports

Taiwan’s machinery tools and equipment sector is primarily export-oriented, making it vulnerable to fluctuations in global economic conditions. Recent geopolitical tensions, coupled with rising inflation, have contributed to a reduction in orders, resulting in a total output value of $3.25 billion—a 10% decrease year-on-year. Despite these challenges, the sector is witnessing a resurgence in demand, particularly driven by advances in Artificial Intelligence (AI), the Internet of Things (IoT), and electric vehicles (EVs).

This demand stimulates growth across the entire supply chain, reinforcing the interconnected nature of Taiwan’s industrial landscape.

Heavy Investment in Electric Vehicles

In the realm of electric vehicles, Taiwan is poised for significant growth. With a range of robust systems, the country has successfully integrated itself into the supply chains of various international automotive manufacturers. This involvement spans critical components, including automotive electronics, charging systems, and motor systems for e-mobility options like e-buses and e-bikes.

As the global EV market expands, Taiwan’s positioning as a reliable supplier becomes increasingly valuable.

Taiwan’s Cycling Industry

Taiwan boasts a commendable reputation in bicycle manufacturing, focusing primarily on mid-to-high-end products. The country exports 45% of its bicycle turnover to Europe, followed by 30% to the United States, achieving nearly $6.3 billion in total output last year, ranking second globally. Taiwanese bicycles cater to various markets, including sports, leisure, and urban transportation, further cementing the industry’s significance.

Textiles: Functional Fabrics and Global Standing

Focusing on textiles, Taiwan stands out as a leading global producer of functional textiles, especially in polyester and nylon fibers, ranking third worldwide. Approximately 70% of the functional fabrics used by renowned international outdoor brands are sourced from Taiwan, which prides itself on maintaining high standards and meeting global demands.

In 2023, Taiwan’s textile industry, consisting of over 4,400 manufacturers, generated around $10 billion, with substantial contributions from exports.

Historical context of Taiwan’s Industrial Evolution

Lin Der-Sheng emphasizes the goal of transforming Taiwan into a critical global supply chain player across six strategic sectors. Over the decades, Taiwan’s industrial structure has evolved significantly. Initially rooted in light industries during the 1960s, the focus shifted towards petrochemicals and plastics in the 1970s and more recently towards semiconductors and optical electronics. This historical trajectory underscores Taiwan’s agility and its ability to adapt to changing global economic landscapes.

As Taiwan navigates these diverse industries, its aim to solidify its role as a stable and reliable partner in the global supply chain becomes increasingly visible. This shift not only highlights Taiwan’s aspirations but also reflects the dynamic nature of global economic interconnectivity. Taiwan’s strategic focus on innovation, manufacturing, and export continues to resonate, promising an exciting future for its economy on the world stage.