From UPSC perspective, the following things are important :
Prelims level : Not much
Mains level : Paper 2- India's relations with Taiwan
The article underscores the centrality of Taiwan in the realms of semiconductor production and how that dominant spills over in geopolitics.
Silicon shield of Taiwan
- Taiwan’s security situation has been worsening amidst mounting economic, political and military pressure from China.
- Any Chinese attack on Taiwan that disrupts the flow of semiconductors would produce significant challenges not only for the US but also China that relies on semiconductor supplies from Taiwan.
- That factor appears to be preventing the crisis from boiling over into a full-scale war that could draw the US and Japan into it.
- It is Taiwan’s so-called “silicon shield”.
Taiwan’s dominance in semiconductor industry
- Taiwan is the world’s leading producer of semiconductors and other electronic components.
- The Taiwan Semiconductor Manufacturing Company (TSMC) has more than 55 per cent of the global market share in the production of high-end custom-made chips.
- Of the two rival companies that have survived, US-based Intel is in trouble and Korea’s Samsung has challenges of its own.
- There will be no generation of data without the semiconductors.
- It might be more accurate to say that “semiconductors are the new oil” and their production is increasingly dominated by Taiwan and the TMSC.
Geopolitics over Taiwan
- As its economic heft and political salience rose in the 21st century, China has ratcheted up pressure on countries that have diplomatic relations with Taiwan.
- China has also compelled international organisations to push Taiwan out of their activities, even when Taiwan had much to contribute.
- Amidst the deterioration of US-China relations in recent years, President Donald Trump was far more supportive of Taiwan than his recent predecessors.
- The Biden team has also signalled continuity with Trump’s Taiwan policies.
- All indications are that Washington will continue to seek some technological decoupling and diversification of sensitive supplies away from China.
- Taiwan will inevitably be the key element in the American quest for resilient supply chains in the digital domain.
Opportunity for India
- Taiwan’s position as a semiconductor superpower opens the door for more intensive strategic-economic cooperation between Delhi and Taipei.
- Part of the problem is that India’s strategic community continues to view Taiwan as an adjunct to India’s “One-China policy”.
- India’s policy oscillates between keeping needless distance with Taipei when ties with Beijing are warm and remembering it when Sino-Indian ties enter a freeze.
- This changed in the early 1990s, when it began to engage with Taiwan, but the policy remained a restricted one.
- In the last few years, though, there has been a steady expansion of bilateral engagement.
- Trade has increased from about $1 billion in 2001 to about $7 billion in 2018.
- India has made a special effort to woo Taiwanese companies that are moving some of their production away from China.
- India is yet to tap into the full range of commercial and technological opportunities possibilities with Taiwan.
- This is particularly true of semiconductor production.
- Delhi must begin to deal with Taiwan as a weighty entity in its own right that offers so much to advance India’s prosperity.
- Delhi does not have to discard its “One-China policy” to recognise that Taiwan is once again becoming the lightning rod in US-China tensions.
Consider the question “India needs to explore the opportunities in relationship with Taiwan even as it pursues and sticks to its One China policy. Comment.
As Taiwan becomes the world’s most dangerous flashpoint, the geopolitical consequences for Asia are real. Although Delhi has embraced the Indo-Pacific maritime construct, it is yet to come to terms with Taiwan’s critical role in shaping the strategic future of Asia’s waters.