In today&#x27;s deep dive, Zaid breaks down how Taiwan became the epicenter of AI. We cover the founding of TSMC, why AI made Taiwan borderline irreplaceable, the economic boom that has Taiwan growing faster than almost every country on Earth, why Nvidia is spending $150 billion a year there, and the geopolitical risk that has Washington warning of an &quot;economic apocalypse&quot; if something goes wrong.

Deep Dive: How Taiwan Became the Epicenter of AI

The Rundown

# Full Transcript

**Podcast:** The Rundown

## Participants

- **Zaid Admani** (Public.com)

## Transcript

Welcome back to The Rundown for another Weekend Deep Dive. Today, we are talking about Taiwan and the role that it plays in the AI economy. Today, almost every chip in the world is made in Taiwan. That includes the chip on your iPhone, likely the chip in your car, and of course, all the state-of-the-art chips sitting inside AI data centers. But how did Taiwan become the epicenter of semiconductor manufacturing? Well, in today's episode, we're going to break down how Taiwan became the AI chip factory of the world.

And why companies like NVIDIA are doubling down on the island. We also take a look at the risk this creates for the global markets and why some tech companies and the US government, for that matter, are looking at alternatives. We got a great one for you today. Let's dive in. Taiwan's dominance in chip making didn't happen by accident. The Taiwanese government actually started building up the industry back in the 1970s. See, back in the early 70s, Taiwan was still mostly known as a low-cost manufacturer.

They were making mostly cheap goods for Western companies. But Taiwan's government was worried that eventually an even cheaper country would come along and undercut them. And, you know, they were right about that. Luckily for Taiwan, though, they started focusing on specialized manufacturing like semiconductors.

Back in 1973, Taiwan created a government-backed tech lab called the Industrial Technology Research Institute, or E-TRI. And the lab's job was to incubate strategic industries. And, you know, they made some early moves. Like in 1976, E-TRI signed a deal with the American company RCA to license their chip manufacturing technology. There's a throwback name that I haven't heard in a while. RCA, man. I had a couple RCA VCRs back in the day.

They learned chip design, manufacturing, and everything else involved with chip manufacturing. And when these engineers returned to Taiwan, they helped jumpstart Taiwan's chip manufacturing capabilities using the knowledge they learned from RCA. And then the real game-changer moment came in 1985 when the Taiwanese government convinced Morris Chang to become the president of E-TRI.

See, Morris Chang spent 25 years working at Texas Instruments in the U.S., and he understood the chip business better than almost anyone alive back then. Shortly after taking over as president of E-TRI, Morris Chang founded a company called Taiwan Semiconductor Manufacturing Company, or TSMC. You might have heard of them. Morris Chang started TSMC in 1987 to be a pure-play chip foundry, which was not the norm at the time.

See, back then, chip companies like Intel and Texas Instruments were vertically integrated, meaning they both designed and manufactured their own chips. But Morris Chang's brilliant idea was to make TSMC only manufacture chips and not to design them. And Taiwan was the best place for him to...

Deep Dive: How Taiwan Became the Epicenter of AI

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Deep Dive: How Taiwan Became the Epicenter of AI

Transcript

Built for investment professionals

Every day you wait, your competitors are findingedge in conversations you're not hearing.

Every day you wait, your competitors are finding
edge in conversations you're not hearing.