The ECCT's Technology committee hosted a lunch event on the topic "Semiconductor diplomacy? Evaluating the challenges and opportunities of TSMC's investments in the US, Japan and Germany” featuring guest speaker Dr Lee Chun-Yi, Associate Professor at the School of Politics and International Relations and Director of the Taiwan Research Hub at the University of Nottingham in the UK.

The speaker gave her views on developments in the semiconductor industry, including the influence of geopolitics in the development of the global semiconductor industry, how this has affected development to date and some of the factors that are likely to affect future developments. She stressed that, given the complexity and numerous inputs in the semiconductor supply chain, no single country is able to produce chips entirely on its own today (although there are examples of this happening in the past). For this reason, it is not possible for any country to try to completely decouple from other countries. This does not mean that there are no valid justifications for efforts to de-risk supply chains by diversifying to some extent.

One of the key success factors in Taiwan's success in semiconductor manufacturing is the resilience of Taiwan's skilled workforce. The arduous working conditions and expectations placed on semiconductor fab workers are notorious. Employees in Taiwan's top tech companies have hitherto been willing to sacrifice work-life balance in order to earn above average salaries and bonuses (which are comparatively high by Taiwan's standards but less so overseas). The working culture is perpetuated in Taiwan's top tech companies because those employees who can't take it end up quitting, while those who manage to survive and even thrive in the harsh working conditions for several years end up being promoted and go on to impose the same conditions and expectations on newcomers. It is much more difficult to find workers willing to make the same kind of sacrifice in countries where TSMC, Taiwan's top semiconductor firm, is investing, namely the United States, Germany and Japan (although it is slightly easier in Japan, which also has a culture where sacrificing work-life balance is accepted). Moreover, workers in other countries who may agree to endure tough working conditions, demand much higher salaries. Ultimately, this means that the costs of producing semiconductors overseas are much higher than in Taiwan.

In the Q&A session, in answer to a question about the potential for Europe in semiconductors, Lee reiterated her position that it is not feasible to have a complete supply chain in any single country and therefore countries should not attempt to do everything at home. Instead, they should focus on areas of the supply chain where they have an advantage and the most potential to add value. For example, she suggested that countries in Europe have the potential to make progress in IC design, since this area relies more on talent than capital investment and commands higher margins than manufacturing. It would also be in Europe's interests to try to capture some market share from US tech giants, which are now taking the lion's share of profits in IC design.