"Taiwan Changed in Times of Crisis"... The Power of Reform, Entrepreneurship, and Openness That Created TSMC

PhD Engineer and Diplomat Eunho Lee, Former Head of the Taipei Mission
Analyzing the Competitiveness of Taiwan and TSMC through "Chipnomics"

"Do you think it would have been easy for Taiwan to address issues such as the separation of financial and industrial capital or inheritance concerns?"

Eunho Lee, former head of the Korean Representative Office in Taipei, emphasized that the most crucial factor driving the competitiveness of Taiwan's industry was not technology itself, but the nation’s relentless drive for change. As an engineering PhD and former official at the Ministry of Trade, Industry and Energy who oversaw strategic goods export control and industrial and trade affairs, Lee spoke with The Asia Business Daily on the occasion of his new book "Chipnomics," underscoring that what Korea should learn from Taiwan is the systemic foundations that enabled companies like TSMC to emerge.

Eunho Lee, former head of the Taipei Representative Office, is being interviewed by The Asia Business Daily. Photo by Paek Jongmin, Tech Specialist

Lee cited reform as the core reason why Taiwan, once gripped by crisis after falling behind South Korea, was able to rise centered around TSMC.

According to Lee, Taiwan overhauled its financial industry structure in the 2000s and significantly reduced its inheritance tax burden. This was a deliberate move to prevent companies and capital from relocating to places like Hong Kong or Singapore.

He assessed, "While both Korea and Taiwan made sound decisions by benchmarking each other during their industrialization phases, after the 2000s, Taiwan continued reforms even on sensitive issues."

He viewed corporate succession through a similar lens. In Korea, inheritance and succession tend to be narrowly framed as issues of "passing on wealth," but in Taiwan, there’s an industrial policy approach where small-and medium-sized enterprises prioritize passing down technology, business relationships, and skilled talent.

On the subject of TSMC’s competitiveness, Lee highlighted "openness." Morris Chang, TSMC’s founder—whom Lee met several times—established the "pure foundry" principle of not competing with customers, and created an open innovation ecosystem that nurtured fabless companies, IP providers, equipment and materials suppliers, and packaging firms alongside TSMC, rather than absorbing them into the company. This openness also extended to the board, which included many members with international backgrounds and global industry expertise.

Lee remarked, "The role of large corporations in setting the direction of the industry is similar in both Korea and Taiwan. The real difference is whether you have vertical integration or foster a horizontal ecosystem that develops surrounding companies."

He also identified differences in startup culture between the two countries. In Taiwan, it is common for founders to share responsibilities from the outset—dividing roles among people with expertise in technology, sales, and finance, instead of a single founder taking on every responsibility. There's also a well-developed culture of successful entrepreneurs investing in and mentoring the next generation of founders.

He emphasized, "You should not only teach engineering students technology," adding, "Universities need to create opportunities for engineering students to meet business and accounting majors, and to gain experience explaining and negotiating their technology with investors, right from their college years."

According to Lee, Korea should pay attention to how Taiwan is reducing its dependence on China. While many Taiwanese companies also moved to China, lured by inexpensive labor and a vast market, since the 2010s they have actively pursued reshoring of core technologies and high value-added production to Taiwan.

He pointed out, "Companies that shifted back to Taiwan in the 2010s were able to exit relatively easily, but for those attempting this in the 2020s, it has become much more difficult." He noted that the later you reorganize your supply chain, the higher the cost becomes.

Lee argued that Taiwan should be regarded as both a learning reference and a collaboration partner. While Korea has strengths in high bandwidth memory (HBM), DRAM, and NAND, Taiwan, led by TSMC, has established a robust foundry, fabless, advanced packaging, and AI server supply chain. In the AI era, memory—which was once a discrete component—has evolved into HBM and is now being designed collectively with GPUs, foundries, and packaging from the earliest stages. He stressed that collaboration between SK hynix and TSMC is absolutely essential.

He especially noted that integrating Korea's manufacturing sectors—such as automotive, shipbuilding, and defense—with Taiwan's semiconductor and electronics ecosystem could create new opportunities in the fields of physical AI and non-China-centric supply chains.

He also suggested that a joint entry into third-country markets in the energy sector would benefit both nations. Rather than building a small modular reactor (SMR) in Taiwan right away, Korean nuclear power and electric infrastructure companies, together with Taiwanese semiconductor and AI server firms, could participate in large-scale AI data center projects in the United States or the Middle East.

Lee concluded, "Korea and Taiwan have grown by learning from each other throughout the process of industrialization. Now is the time to once again look at each other’s strengths. Even if we are competitors in some areas, we must cooperate where collaboration is needed."

Cover of "Chipnomics," authored by Eunho Lee, former Representative of the Taipei Mission in Korea

"Chipnomics" is a book in which Lee analyzes the structure of Taiwan’s industry from an engineer's perspective, drawing on his personal experiences meeting influential figures such as Morris Chang, founder of TSMC, as well as other leading entrepreneurs and chaebol executives, and observing the industrial field during his time in Taiwan. The book goes beyond telling the success story of TSMC alone; it delves into startup culture, finance and tax systems, corporate succession, utilization of global talent, reduction of dependence on China, and the relationships between large corporations and small- and medium-sized enterprises.

This content was produced with the assistance of AI translation services.