TAIPEI (TVBS News) — Taiwan's dominance in advanced semiconductor manufacturing makes the island both indispensable to the global economy and a prime target for its powerful neighbor. Former White House economist Todd G. Buchholz delivered that warning Wednesday (June 24) at a business summit in Taipei.
"If Taiwan is solely known for the chips, it also makes it a more attractive target to take over because it's very clear what the prize is," Buchholz told TVBS News on the sidelines of the summit. He noted that while TSMC's manufacturing plants could theoretically be relocated to places like Texas and Ohio to diversify the global supply, Taiwan's strategic value extends beyond its factories.
Buchholz, who served as White House director of economic policy under President George H.W. Bush, urged Taiwan to expand beyond hardware manufacturing into defense software and command systems. He argued the shift would make the island "more integral to world defensive technologies" and harder to isolate.
"I think it's important for Taiwan to move beyond current hardware technology — semiconductors and the like — and to think about the military needs of the world," Buchholz said. "Think about it not just as the hardware but the software — the command systems, the defense systems."
Taiwan Semiconductor Manufacturing Co. (台積電), known as TSMC, fabricates more than 90% of the world's most advanced chips — the processors powering artificial intelligence data centers, fighter jets and smartphones. Buchholz characterized a potential Chinese blockade or invasion as a "supply-chain cardiac arrest" that could cost the global economy US$10 trillion (around NT$317.3 trillion).
Buchholz delivered his keynote at the 9th Taiwan's Great Future International Summit (第九屆台灣大未來國際高峰會), organized by Business Today (今周刊) magazine. He drew parallels between the Taiwan Strait and the Strait of Hormuz, where ongoing tensions with Iran have disrupted global oil shipments.
"Iran handed the Trump administration the equivalent of a practice test. Taiwan is the final exam," Buchholz said during his keynote address. He argued that Chinese President Xi Jinping (習近平) and his leadership team have been closely studying U.S. responses throughout the Iran conflict to gauge American resolve.
The economist pointed to South Korea as a model. "South Korea over the 1980s and 1990s proved successful in hardware — cars, refrigerators, Samsung chips," he said. "But what is remarkable to me now is how powerful South Korea is in software, in K-pop, in movies, in fashion."
TSMC is already building fabrication facilities in Arizona under the 2022 CHIPS and Science Act. "It's a difficult dance for Taiwan to make it easier for the US to access chips without giving up its 'golden goose,'" Buchholz said.
A 'Committee for the Defense of Freedom'
Beyond technology, Buchholz proposed that Taiwan position itself as a coordinator for regional defense cooperation, serving as a "committee for the defense of freedom" in Asia. "The distrust between Seoul and Tokyo is not seen in the relationship with Taiwan," he said. "Taiwan is a bit of a peacekeeper."
Buchholz argued that Taiwan's unique position — trusted by regional powers that often distrust each other — gives it an opportunity to lead. "China intimidates Vietnam, the Philippines, (South) Korea, Japan," he said during his keynote. "Taiwan can play a role in helping to unify those countries."
He elaborated on the concept in the interview, suggesting Taiwan could become a hub for coordinating responses to Chinese pressure across the region. "Taiwan should seek to become a kind of 'committee for the defense of freedom' in Asia because it is under threat, relatively wealthy, and actually trusted by those other nations that may not trust each other so much," Buchholz said.
The proposal reflects Buchholz's broader argument that Taiwan must actively demonstrate its value to the U.S.-led security order rather than rely passively on American protection. He noted that some voices in Washington have grown skeptical of allies perceived as "free riders" who benefit from U.S. military commitments without contributing proportionally to their own defense.
Buchholz also urged Taiwan to demonstrate its commitment to self-defense. "Taiwan needs to demonstrate that the U.S. should not be planning to defend a country that isn't interested enough in its own defense," he said.
Asked whether some political factions in Taiwan might be perceived as too conciliatory toward Beijing, Buchholz acknowledged the concern. "In the U.S., some perceive that certain parties in Taiwan are too conciliatory, as if China taking over wouldn't be so terrible," he said.
Buchholz struck an optimistic note on Taiwan's economic performance, noting that GDP growth has been strong and exports have surged. "Taiwan's economy has been doing extremely well — GDP up, exports up significantly," he said during his keynote, adding that he had seen photos of Nvidia CEO Jensen Huang displayed at night markets across Taipei, a sign of the island's embrace of its tech-driven prosperity.
The summit continues Thursday with sessions on Taiwan's AI industrial corridor and healthcare policy. ◼ (At time of reporting, US$1 equals approximately NT$31.73)