Author: Paulina Uznańska

Pulaski Policy Paper, no. 15, 20th of November 2024

Taiwan, a global leader in semiconductor manufacturing—fabricating over 60% of total semiconductors and over 90% of advanced chips—has become central to global supply chain security strategies. Given its geopolitical risks, any disruption in the Taiwan Strait would have severe global economic impacts.

The COVID-19 pandemic and Russia’s war of aggression against Ukraine have revealed critical vulnerabilities in global semiconductor chains, necessitating diversified production sources. Taiwan, a global leader in semiconductor manufacturing—fabricating over 60% of total semiconductors and over 90% of advanced chips—has become central to global supply chain security strategies. Given its geopolitical risks, any disruption in the Taiwan Strait would have severe global economic impacts. For Taiwan, Central and Eastern Europe (CEE) offers a strategic, like-minded platform to expand its reach into the EU market. Simultaneously, for CEE, partnerships with Taiwan present an opportunity to integrate into international semiconductor networks and support EU objectives for building a resilient chip ecosystem in Europe.

Forging a semiconductor partnership between Taiwan and CEE countries would not only help secure global supply chains by expanding Taiwan’s EU footprint but would also position CEE as a valuable contributor to the EU’s semiconductor revival. By leveraging Taiwan’s expertise and CEE’s strategic location, both parties can enhance supply chain resilience and advance their economic and technological goals. To achieve this, policymakers should take the following steps:

1. Start from lower-level chip manufacturing: Due to the limited pool of chip engineers and significant state aid from other European countries, CEE’s ability to attract high-capacity manufacturing investments, like chip fabs, is restricted. However, investing in low-end chip manufacturing could strengthen CEE’s role in the EU semiconductor supply chain, with Taiwan’s involvement being especially valuable. This approach would also serve as an initial step in advancing the region up the value chain over the coming years.

1. Develop talent and expertise: CEE should partner with Taiwan to develop a semiconductor talent pool through fully funded academic programs, on-the-ground training labs, and targeted workshops. Supporting joint research teams and boosting funding for applied research would help keep innovation at the forefront of the region’s semiconductor industry.

3. Align with the European Chips Act: CEE countries should align their semiconductor strategies with the EU Chips Act to access EU funding and lobby for dedicated projects that include Taiwan’s involvement. Emphasizing joint R&D efforts in design platforms and establishing national competence centers together with leading high-tech companies from Taiwan would drive regional semiconductor innovation.

1. Analyze the geopolitical environment: Partnering with Taiwan in the semiconductor sector could help the region position itself in the broader European and global high-tech ecosystems, and strengthen cooperation with other critical actors in the chip supply chains, such as the U.S., Japan, and South Korea. Moreover, while China often responds aggressively to strengthening political relations with Taiwan, semiconductor cooperation with the region is generally seen as a business partnership and is less likely to bring diplomatic or economic repercussions.

Author: Paulina Uznańska, Finalist of the Empowering Young Women Experts in Regional Security and Foreign Policy Fellowship

An analyst in the China Team working on modern technologies and EU-China relations. Paulina Uznańska is also pursuing a PhD in law at the University of Warsaw’s Doctoral School of Social Sciences. Her dissertation on China’s Internet governance is supervised by Professor Rogier Creemers from Leiden University. She graduated with honours from Peking University (China Studies: Economics and Management) and the University of Warsaw (Chinese Studies), as well as from the Warsaw School of Economics (Global Business, Finance and Governance). She was a visiting scholar at Leiden University, University of Cologne and National Chengchi University. Paulina is a co-founder of the Polish Research Centre for Law and Economy of China at the University of Warsaw and a fellow of the Polish National Agency for Academic Exchange. She co-edits monographs in Chinese (“New Technologies and Law 新科技与法律”, Scholar 2022) and translates from Mandarin (“China-Central and Eastern Europe. A History of Literary Interactions,” Dialog 2020).

Views and opinions expressed are however those of the author only and do not necessarily reflect those of the European Union or the European Education and Culture Executive Agency. Neither the European Union nor the granting authority can be held responsible for them.