Scenario simulation of Taiwan's semiconductor industry in the next five years

With globalization, the semiconductor industry has become a cornerstone of modern technology and plays a crucial role in Industry 5.0. From smartphones and computers to automobiles and medical devices, almost all modern equipment relies on semiconductor technology. However, in recent years, the formation of international geopolitical situations and the US-China trade war have had a certain impact on the semiconductor industry. Taiwan, due to its key position in the global semiconductor supply chain, is likely to be significantly affected. The geopolitical risks and challenges brought about by the US-China trade war will force companies to reconsider their supply chain strategies and market layouts; furthermore, how companies should respond to these challenges has become an urgent issue to be addressed.

This paper aims to explore the impact of geopolitics and the US-China trade war on the supply chain of Taiwan's semiconductor companies through scenario simulation , and to analyze the companies ' coping strategies in this context. The main objective of this study is to understand the specific impacts of geopolitics and the US-China trade war on the supply chain of Taiwan's semiconductor companies through scenario simulation, including issues such as rising costs, supply chain disruptions, and market uncertainty. Simultaneously, the research process also explores the strategies adopted by companies to address these challenges, such as supply chain diversification, localized production, and partnerships with other countries.

The study employed scenario analysis, interviewing semiconductor and related technology management experts to simulate potential scenarios for Taiwan's semiconductor industry over the next five years. This allowed the Taiwanese government and businesses to prepare in advance and formulate corresponding strategies. The study compiled expert meeting data to identify three scenarios: the most optimistic scenario of further growth; a neutral scenario of mixed strengths and weaknesses; and the most pessimistic scenario of technological stagnation. After simulating each scenario, a SWOT analysis was conducted to provide relevant strategic recommendations for the government and businesses.

Research has identified the most significant influencing factors for Taiwan's semiconductor industry as: its strategic location as a key hub; process technology; R&D talent; and policy support. Therefore, scenario simulations predict a mixed picture for the next five years, with breakthroughs in wafer fabrication technology, a widening talent gap, integration of the upstream, midstream, and downstream supply chains, and geopolitical influences. Strategic recommendations are as follows: For the government, efforts should be made to address the talent shortage and actively seek product export licenses; for businesses, continuous R&D and innovation are crucial, along with actively recruiting R&D talent, diversifying supply chain risks, and proactively managing operations to mitigate geopolitical impacts.

Understanding the impact of geopolitics and the US-China trade war on the semiconductor industry is crucial for companies to develop effective response strategies. With continuous technological advancements and changes in global markets, semiconductor companies need the ability to flexibly respond to external risks. This research not only provides valuable insights for semiconductor companies but also offers theoretical and practical support to policymakers and academia.