Throughline - Silicon Island (2022)

Episode Date: September 7, 2023

In a world where computer chips run everything from laptops to cars to the Nintendo Switch, Taiwan is the undisputed leader. It's one of the most powerful tech centers in the world — so powerful that both China and the U.S. have vital interests there. But if you went back to the Taiwan of the 1950s, this would have seemed unimaginable. It was a quiet, sleepy island; an agrarian culture. Fifty years later, it experienced what many recall as an "economic miracle" — a transformation into not just one of Asia's economic powerhouses, but one of the world's.Learn more about sponsor message choices: podcastchoices.com/adchoicesNPR Privacy Policy

Support for this podcast and the following message come from Autograph Collection Hotels, with over 300 independent hotels around the world, each exactly like nothing else. Autograph Collection is part of the Marriott Bonvoy portfolio of hotel brands. Find the unforgettable at AutographCollection.com. Our lives here in the U.S. are influenced by and inextricably intertwined with the history, politics, and cultures of countries like China, South Korea, and Taiwan. Today, we close out our Superpower series in collaboration with our friends at Planet Money to tell the story of how the Taiwanese government lured engineers back from the U.S.

and grew to dominate an industry the modern world can't function without. This is the Nintendo Switch. We gotta go! We gotta go! So, I got the Nintendo Switch. I got the Nintendo Switch. I got the big one. Animal Crossing came out and like the lockdown started. This was a game that like if you were not a gamer, this was a game that you can still get into. And during the coronavirus pandemic of 2020,

finding one was harder than finding toilet paper. Nintendo was hit hard by the global chip shortage during the last quarter. The gaming giant announced Wednesday it sold 23% fewer Switch consoles in the April to June quarter than a year before. More and more companies are weighing in on the impact to their bottom lines. Nintendo chip shortage, production delays and higher prices have really made it tough for people to find a vehicle. Chips are needed for just about all devices. Laptops, home appliances like refrigerators, gaming consoles, and medical equipment.

Folks at home might be wondering why it's such a big deal for manufacturing something so small, the size of a postage stamp. Why is that so important? Well, semiconductors are small computer chips that power virtually everything in our lives. Every single electronic product these days has these chips in them that allow them to do what they do. Everything you're using today is part of semiconductor world. Taiwan's semiconductor manufacturing, TSMC, accounts for more than half of all global production of complex chips. The world's massive reliance on TSMC may also leave the global chip supply vulnerable to earthquakes, drought, and geopolitical tensions with China.

We don't have the ability to make the most advanced chips right now. But today, 75% of the production takes place in East Asia. 90% of the most advanced chips are made in Taiwan. After four straight days of military exercises, including missile launches, precariously positioned warships, and airspace-infringing fighter jets, China appears poised to keep its foot on the gas as it attempts to keep Taiwan in line.

Taiwanese tech giant TSMC warns an invasion of the island would render its factory inoperable, devastating global supply. I'm Ramteen Arablui. And I'm Kenny Malone. And you're listening to a very special collaboration between ThruLine and Planet Money. Now the Nintendo Switch and the Semiconductor, the two of those tell a hugely important global story about this moment, but a little bit of

background. So the Nintendo Switch is a hugely popular video game system. It's sold 129 million units worldwide, which is a fact that is probably worthy of its own episode. But we're not going to do that. We're going to focus on the tech that actually powers the switch, semiconductors. And the question to begin with really is, what is a semiconductor? Yeah, semiconductor is a specialized material that can do a huge number of jobs, depending on how you manipulate that semiconductor. Without getting too technical, no semiconductors, no advanced computing. That's the bottom line.

And so semiconductors are in everything. Cars, laptops, phones, ATMs, satellites, even nuclear weapons. Almost all of the world's most advanced semiconductors are created on one island, Taiwan, which sits about 100 miles southeast of China. And its semiconductor industry makes it one of the most important places on earth. If you think about semiconductors like oil, right, then Taiwan is kind of like the technological Saudi Arabia. Some observers have even called Taiwan's semiconductor industry its silicon shield. And Taiwan has needed that shield. Since 1949, China has been run by one government and Taiwan by another. And China has never recognized Taiwan as an independent country.

China has again said it will, quote, reunite Taiwan with the mainland as tensions ramp up further between Beijing and the self-governing island. Taiwan disagrees with a pledge to defend its sovereignty and democracy. The U.S. does not have formal diplomatic ties with Taiwan, but has pretty much supported the island as a buffer against China. Are you willing to get involved militarily to defend Taiwan if it comes to that? Yes. You are? That's a commitment we made. So these three places have formed a kind of weird love triangle and taiwan's rise as a major tech power has added more tension to that relationship the story of how one tiny island got caught in between two world superpowers is fundamentally an economic story

it is a story of how taiwan attracted its best and brightest back to the island and created Asia's version of Silicon Valley, a reverse brain drain built on semiconductors. In this episode of ThruLine from NPR, in collaboration with Planet Money, also from NPR, we're going to trace the story of Taiwan's rise through its biggest economic success and through the eyes of an entrepreneur who put a lot of semiconductors into the Nintendo Switch while keeping our own eyes on the rising tensions between the U.S. and China and what it could mean for all of us. Coming up, the Taiwan miracle. Hi from Knoxville, Tennessee. This is Mary and you are listening to ThruLine from NPR.

This message comes from WISE, the app for doing things in other currencies. Send, spend, or receive money internationally and always get the real-time mid-market exchange rate with no hidden fees. Download the WISE app today, or visit wise.com. T's and C's apply. Part 1. The Beautiful Island In 1973, a 20-something Taiwanese student stepped off of a plane in Montreal, Canada. My name is Min Wu. I actually grew up in Taiwan. It was Min Wu's first time traveling to North America, and it was a journey that took multiple days, starting from Taipei and then making stops in Tokyo, Seattle, Vancouver, until finally landing in Montreal. And when you're settling in a whole new place almost halfway around the world, it is, of course, not easy.

Well, of course, you know, nervous. You know, first time go to a place where I have no idea. And also, I'm not speaking the language. And, you know, I'm in Montreal, you know, not only English, but also they speak French. So French is totally new to me. Min arrived to pursue a master's at McGill University. He was going to study electrical engineering. When I arrived at McGill, the first day of the school, because I got teaching assistance, so I have report to the professor so I went to see him and he said something to me. I was stuck. I didn't know what he's saying.

He repeat one more time and I still don't get it okay. So he complained to the professor who Min later found out what this professor was saying. Good morning. He say good morning in heavy British accent. So I was totally out, okay? It was a rough start, but Minh was going to stick it out. At that time, I'm having two choices. I was studying graduate school in Taiwan, and I planned to work in Taiwan. But that time, my girlfriend went to U.S.

So I have decided whether I'm going to stay in Taiwan and maybe say goodbye to my girlfriend. So I decided to follow her footsteps. So, he travels across the world from his beautiful, warm island to Montreal, where the winters are stupid cold. But look, he's got love to keep him warm, right? Did you do things actively to try and learn English quickly?

Did you listen to NPR constantly? No. At that time, I have no idea about NPR. But Min was listening to the radio, it turns out. This game is over. It was never in doubt. The Expos have beaten the Pirates 6-5. I turn on the radio to hear the baseball game. Yeah.

And then I hear the hockey game. He loses control and the puck comes out of the Montreal end. You know, Montreal Canadiens was a very good team at the time, in the 70s. And the game is over. The Montreal Canadiens have won the Stanley Cup for a record 16th time. That's how I pick up the speed. Min was going through all of this because he had a vision, another love. When I was an undergraduate, I already fell in love with semiconductors.

Semiconductors. Even in 1973, in the infancy of the computer age, Min Wu recognized that those little components that help computers run were the future. He could see it. And he could see his own future there, too. I think that will have a huge potential. That's the impression I got myself at the time. And back in Taiwan, the government was also recognizing the technology's potential. So that's where KT Lee came in. Li Guoding, otherwise known as KT Lee, is sometimes called the father of Taiwan's economic miracle,

the man who saw the future. He's a hero in modern Taiwan. My name is Tom Gold. I'm a professor of sociology at the University of California, Berkeley. And my field of expertise is actually political economic development in East Asia, primarily China, Taiwan. Tom has been visiting and studying in Taiwan since 1969. He's also written a book called

State and Society in the Taiwan Miracle. And he actually met KT Lee. We wanted to talk to him because he's watched this whole story unfold. But we'll get to that. First, though, we need to go back before the miracle. Taiwan refers to one large island and several offshore islands about 100 miles off the east coast of mainland China. Today, Taiwan is a self-governed democracy of about 24 million people. That's claimed by China. But that's a very simple way of summing up a very complicated history. Taiwan, about the size of Vermont and Connecticut combined,

it has a range of high mountains running the length of the island. The climate varies from tropical in the south to semi-tropical in the north. Portuguese sailors named it Ia Formosa, beautiful island. But the island people prefer the name Taiwan, which means terraced bay. Taiwan has long been a chess piece in East Asian geopolitics. Portuguese explorers named it Formosa. In the 17th century, both the Dutch and the Spanish occupied parts of the island. And throughout the 1900s, it was a pawn in a larger game over power and position between China and Japan.

For 50 years, Japan occupied Taiwan and also engaged in battles with the mainland. In the 1930s, a military conflict arose between China and Japan, which resulted in an all-out war in China that lasted for almost a decade. The shared goal of driving out the Japanese led to a reluctant and uneasy alliance between the nationalists, led by a man named Chiang Kai-shek, and communists, led by Mao Zedong. They defeated the Japanese in 1945 and then turned their guns right back on each other. A few years later, the communists emerged victorious and the nationalists were literally pushed off the Chinese mainland. The Nationalists settled on an island about 100 miles east of the Chinese mainland, Taiwan. Chiang Kai-shek vowed to stage a rebellion from there and take China back from the communists. In December 1949, Chiang Kai-shek and the nationalist government flee to the independent

island of Formosa. There's a documentary hosted by Walter Cronkite that shows Chiang Kai-shek gazing out over the island. Here Chiang waits, vowing to return. The future remains uncertain. They didn't really expect to stay there, and they weren't going to put much investment into developing the economy, because their focus was on the mainland, where they planned to defeat the communists. And you had an influx of about two million more civilians and soldiers from the mainland who settled in Taiwan, expecting not to stay there, but to go back. But obviously, they haven't gone back to this day.

And that has led to all sorts of political, social, economic consequences. After finishing school in Montreal, Min Wu decided to head south to the U.S., towards a place that would become the beating pulse of the tech industry. Mile upon lush green mile of fruit trees, heavy with apricots, cherries, almonds. Marketers had dubbed it the Valley of Heart's Delight. But for decades, it had just been home to a paradise of produce, which of course would become Silicon Valley. Min studied at Stanford there, then went to work at Intel. You're creating things which change the way people work, the way they learn, the way they play, the way they communicate, the way they live their life. By this point, Min says that his English had improved a lot,

but he found that it still wasn't good enough. I did a very good job on the technical side, but I lost battle as a program manager position because they tell me there's another guy and he's English better than me. I lost the battle. So English was often part of the battle during your time in the U.S.?

Yes, exactly. English was often part of the battle during your time in the U.S. Yes, exactly. And that's also the reason for me to go back to Taiwan. Now, Min was contemplating returning back home after all these years. Except Taiwan would look a lot different compared to the island of his childhood. And a lot of that change happened, in part, because of the U.S. Washington, with the Far East the center of world anxiety, President Eisenhower signs a congressional resolution giving him authority to use armed forces in defense of Formosa and other strategic islands. The Reasons went back to the Cold War. Lots of you may already know this part of the story.

The United States was fighting communism wherever it spread, and it was paying particular attention to both communist China and the nationalist exiles in Taiwan. Since the Korean War, the United States has extended both economic and military aid to the free Chinese to keep the island from falling into communists' hands. What they were worried about was an invasion from the mainland that would incorporate Taiwan and then it would become part of the

People's Republic of China. The U.S. said, wow, Taiwan is now on the front line of communism. We have to roll back communism, starting with a place like Taiwan. We're going to commit a lot of military and economic and technical aid to Taiwan to prevent it from being taken over by the communists. The aid that the U.S. gave to Taiwan was a way to contain China. And the U.S. went all out.

We were providing grants, we were providing loans, we were providing subsidies across the board. And the aid from the United States continued even after the Korean War ended. And over the next few decades, the Taiwanese used this support to help transition the island from a farming-based economy to one that depended on industry, mainly factories that assembled goods like clothes, toys, bikes, and small electronics. In 10 years, more than 6,600 new factories of all kinds have been built, and all are expanding and prospering. This mushrooming of industrialization has raised the Formosan standard of living to a place in the Orient second only to that of Japan. You know, you have to look at this from a global perspective. At the same time, in the 1960s, the cost of labor in the U.S. was going up and American industrialists were looking for ways to save money.

So labor was one thing. So they started looking for foreign investment opportunities abroad. And those industrialists looked to Taiwan with a growing infrastructure for factories, which for Taiwan was great and all, but it wasn't going to be enough. If all they did was, you know,

assemble products made in other countries, then Taiwan would remain stuck economically. They needed to level up. They needed to become the key dealer specifically for high-tech parts. And to do that, they were going to need foreign investment. So the government's role was as a matchmaker,

very aggressively, proactively started identifying foreigners, saying, why don't you come to Taiwan? Which brings us back to the man called the father of the Taiwanese miracle, KT Lee. He took the risk of coming with the government to Taiwan because he didn't want to stay in China under the communists, but he also didn't go to Hong Kong or Japan or the U.S. He was committed to Taiwan. KT Lee was born in Nanjing, China in 1910. He spent many years working on the mainland before fleeing to Taiwan. And he was really good at being a technocrat. He held a bunch of jobs in the Taiwanese government and helped guide Taiwan's economy from farming to industry.

By 1976, when Min Wu started his career in Silicon Valley in the U.S., KT Lee and others were in Taiwan thinking about how computer chips and semiconductors could transform the island. And that's also around the time that sociologist Tom Gold met KT Lee. He told me that he was teaching a class at National Taiwan University, which is the premier university, every Saturday morning for three hours. And he was going to invite the leading entrepreneurs and government officials and planners and journalists and professors to talk about their experience with Taiwan's rapid economic development. So every Saturday morning, I would go to this class, which was conducted in Chinese. He was slim, under six feet tall.

As I recall, he had a prominent nose. Pretty nice looking, handsome older man. He was probably, I'd say, maybe in his 60s or 70s. He seemed very sober, very level-headed, the sort of guy you could trust right away, not a showboater. He was obviously very diplomatic in his ability to work with a, you know, a military, militarized authoritarian government, as well as foreigners.

And he was somebody who understood what the potential of Taiwan was. He had this vision of Taiwan being a technological hub in East Asia. Taiwan had to advance to the next stage, and that was going to be technologically intensive industries. But you can't build a tech industry without engineers. And by the late 70s, many Taiwanese engineers had left and gone abroad. A lot of the people who graduated from engineering schools in Taiwan felt that their future really didn't lie in Taiwan. So a lot of them came to the U.S.

and they started working for companies like Texas Instruments and companies in Silicon Valley, which was just getting going. So what did KT Lee do? He crossed over the Pacific to try and bring them back. Coming up, KT Lee's vision meets Min Wu's ambition, and Taiwan changes forever.

Hello, this is Clark Fair from Homer, Alaska. As an avid purveyor of history, I very much appreciate ThruLine and the skill with which its hosts connect the dots between the past and the present. Thank you. We just want to take a moment to shout out our ThruLine Plus subscribers. Thank you so much for your support. If you don't already know, subscribing to ThruLine Plus means you get to listen to our show without any sponsor breaks. And you also get access to special bonus episodes where we take you behind the scenes, introduce you to our amazing producers, and tell you about how we make the show. To get these awesome benefits and support our work here at NPR, head over to plus.npr.org slash ThruLine. Support for this podcast and the following message come from the NPR Wine Club,

which has generated over $1.75 million to support NPR programming. Whether buying a few bottles or joining the club, you can learn more at nprwineclub.org slash podcast. Must be 21 or older to purchase. Part 2. The Perfect Client By the mid-1980s, Min Wu was a successful engineer. We were already in California for 12 years. He was about 40 years old. He'd married his girlfriend. Remember the one he went to Montreal for? And they'd had a couple kids. He was working at Intel. All in all, most people would consider this a success. But Min wanted more. He wanted to start his own company. And so he did

with a few of his friends. But very small. At that time, we have four people, five people to get started. What is the name of that company and what are you doing? Called Micronics Inc. Micronics Inc. It was a typical startup. It came up with ideas for new products and even made some. One product we know we call the Keyfinder. Do you know the Keyfinder? Yeah. If your key lost, you know, you can whistle. And then that device responds with a beep.

You know where they are. We are making lots of money on that. Min was proud of these things, and he wanted Macronix to grow and make more products and even build factories to build those products.

But to do that, he needed investment from venture capitalists. So I told my friend, I'd like to do a little bit bigger. But in the U.S., at the time, the venture capital people, they want to invest into a company who specializes in design, software, things like that, but no more factories. U.S. companies were already outsourcing manufacturing, and high-tech assembly is extremely labor-intensive.

While Min was out there unsuccessfully trying to attract investment, KT Lee was in Taiwan trying to convince investors to buy into Taiwanese companies that were trying to establish themselves on the island. KT Lee and his colleagues wanted to create a physical home for Taiwan's new technology industry, an industrial zone that would provide tax breaks and other incentives to companies that set up shop there. They found a spot in the northwest region of Taiwan, a small, unremarkable piece of land in the city of Hsinchu that was destined to become Taiwan's Silicon Valley. You know, it looks rolling hills and it's green and it's clean and it's going to look more like Palo Alto than it looks like, you know, just a barren cement desert.

There was energy, momentum, productivity, and it worked. Hsinchu Science Park is sometimes called the Silicon Valley of Taiwan. By 1989, after a decade of being established, Hsinchu Park housed more than 100 businesses, employed more than 16,000 people, and sold $1.75 billion in products. New statistics from the finance ministry reveal the impact of Hsinchu Science Park on the changing geography of wealth in Taiwan.

Meanwhile, KT Lee was pulling out all the stops, trying to lure Taiwanese engineers back home. Taking delegations to Silicon Valley and Route 128 outside Boston and Austin, where you had Texas Instruments, bringing these people from Taiwan together and Austin, where you had Texas Instruments, bringing these people from Taiwan together and saying, look, we realize that you're facing these glass ceilings in the United States. But if you come back to Taiwan, we will supply you with laboratories. We'll supply you with all of the infrastructure that you need. We'll supply you with engineers. We'll find loans. We'll invest with you. You know, we'll go joint ventures with these things. We'll find foreign

partners. And we won't make political demands on you. It was kind of an easy sell. A lot of them felt that they were coming up against a glass ceiling. They were never going to be the CEO. They were never going to be the top management because they were not white, because English was not their first language, because they were immigrants. and formed the whole new class of entrepreneurs who are the ones who pushed Taiwan into the, say, the new electronics, computer, high-tech stage. That's also the reason for me to go back to Taiwan. Min Wu was one of those engineers who answered the call. At the time, Taiwan is in the starting mode. He never met KT Lee personally in the U.S., but Min saw the opportunity in Taiwan clear as day.

You know, I'm from Taiwan, so I have many alumni and friends in this field. Min bought into the vision, and he had his own, the thing that he had been obsessed with since college. He wanted to open his own semiconductor factory in Taiwan. And so? We're looking forward to making your journey a pleasant and comfortable one. He jumped on a plane. So how often are you going back and forth between North America and Taiwan before you start your business in Taiwan?

Once a month. Ladies and gentlemen, we are now descending into Taiwan Taoyuan International Airport. I personally fly into Taiwan and talk to Bishy people. Within a year, I almost travel 12 times. Every month, I was in Taiwan. Think about it. From San Francisco to Taipei, I'm the economy class. Once a month, that's a torture, okay? So I stay at this hotel

even they know me. My friend can use my name to get discount from the hotel. The Taiwanese government had established various partnerships to find money for tech entrepreneurs in Taiwan, including with American VC firms. This irony wasn't lost on Min Wu. So you had to go all the way back to Taiwan to get an American venture capital person interested in you? Yes, that's correct. Twelve times. Twelve times, that's correct. 12 times. 12 times, that's right. In this process, he did scrape up some investment, but none of it was enough to build a factory.

Remember, factories are expensive, and semiconductor factories are even more expensive to make. They take years to build. There are these massive facilities with clean rooms that have to be more sterile than an operating room to prevent any dust or dirt from getting into the semiconductor. So while he laid the groundwork for that, Min needed to come up with another way into the industry. And he found the perfect client. This boy is doing more than just playing a video game.

He has entered another world. Oh, yeah, Nintendo. Nintendo is, well, almost the most fun a kid can have. The original 8-bit system, the one where you had to blow on the cartridge and somehow that seemed to make it work. It may be the most addictive toy in history. That Nintendo was just getting big in the 1980s.

Millions of them were being sold. In just three years, they've sold more than 11 million hardware units at about 100 bucks each. And like most computer systems, semiconductors were critical to making video game consoles like Nintendos. The only problem was that the U.S. and Japan were in trade wars during the 1980s. And Japan was making the chips for Nintendo. With the U.S. economy sinking, there is growing pressure in this country to get a better trade deal with the Japanese. And that's not going to be easy because of the different way each country views both the causes and the cure. But after a bunch of pressure from American businesses and a tense negotiation, the Japanese eventually agreed to open up its chip market to American companies.

And Min was like, I'm getting in on this. It's a little complicated, but basically what he did is he took advantage of the fact that he'd set up businesses in both the U.S. and Taiwan, and he snatched those Nintendo contracts right up. I'm the only U.S. company doing the read-only memory. He's talking about semiconductors. I'm the only one, so they have to buy from me. But he still didn't have a factory to actually make semiconductors. Yeah, I know, it's weird that he gets a deal to deliver semiconductors for Nintendo, but he still can't actually make semiconductors. Yeah, I know, it's weird that he gets a deal to deliver semiconductors for Nintendo, but he still can't actually make them.

So whose semiconductors actually ended up in the Nintendos that were then shipping to the United States? At that time, the biggest company called Samsung. Oh, they're Samsungs. We are buying Samsung and then selling to them, okay? Min-woo came up with the ultimate scheme. Basically, he was buying Korean semiconductors from Samsung to sell to the Japanese using a Taiwanese company that, through a technicality, was able to appear as an American company and funding it all with the VC money he'd gotten in Taiwan. I know, it is a lot.

And this scheme allowed him to start raising funds to actually build his own factory in Taiwan. And at that point, is Nintendo your biggest client? Yes, still. Even today, still number one. Coming up, Min Wu builds his factory, Taiwan builds an industry, and China takes notice. Yes, this is Ray Lyle from Chattanooga, Tennessee.

You're listening to Food Line on NPR. Part 3. The Miracle. It was 1989. Minwoo's scheme to raise money for his semiconductor factory was working. He'd left behind Silicon Valley to go all in with Taiwan's Hsinchu Park. But when he arrived, it wasn't like there was a bro-y, sunny office with cold brew on tap waiting for him. I come back to Taiwan and then I only find a desk. Okay, I don't have a office. I borrow a desk. Okay, I don't have even my office. I have, I borrowed a desk from friend. Was it a nice, a nice desk at least? Or no, not?

No, just a desk. Yeah, that's how I get started. The government of Taiwan is actively wooing its sons and daughters home. Its two offices in California maintain data on nearly 3,000 engineers and computer scientists, information they make available to Taiwanese talent scouts. Min Wu was his own talent scout. For months, he'd been recruiting other engineers, people like him, who were originally from Taiwan or Hong Kong, to establish Macronix Inc. in Taiwan. He came with his flashy sales pitch and his own firsthand experience of being belittled

and dismissed because of his English. One of the reasons is, again, is related to the language because language is the ceiling for those excellent engineers to grow. Here's a passage from a LA Times article from 1989 about Silicon Valley's reverse brain drain to Taiwan. Other government agencies sponsor five seminars a year, each in Los Angeles, San Francisco, Houston, Seattle, and New York, on high-tech career opportunities in Taiwan. In addition, they place recruiting ads in Chinese language newspapers, such as a recent ad portraying an elephant separated from its herd. And the plea, come home.

The allure was obvious. In the U.S., they have no opportunity. So I can recruit those senior people back to Taiwan because they can grow. You know, I recruit several people I know. But then from them, I look into more, and then this is the first time I bring these people back to Taiwan, so that was

a reverse brain drain. Yeah, how many brains did you drain from the U.S. when you went back? Like, how many people did you bring? In a couple years, actually 40. 40? 40. Four zero, 40.

Whoa. Was there a part of you in the back of your head, though, that was worried that you're selling this to people who have established careers here as engineers? And you're like, what if this doesn't work? What if we go back to Taiwan, start this company, and it no were you worried we will make work we will make work that's why that's where you know determination right you know i mean as a startup as a entrepreneur you cannot think about the dark side right Because if you think too much,

you will have a hard time to start anything. Because to start up anything will require a risk. Min was willing to take this risk because he knew that semiconductors were the future. So when you have risk, you cannot see always thinking about the bad part. They know there's a potential to fail, but the only thing I do is try to make it happen. It may be tempting to view Min's story or Taiwan's march towards success as merely a story of determination, intelligence, grit. And it was that. But the reality is, KT Lee's strategy of wooing talent back to Taiwan

was facilitated by a lot of support from foreign countries, including the United States. The new capitalist class were very dependent on the government. And the government itself was very dependent on American assistance. And the government itself was very dependent on American assistance. This is Tom Gold again. So the role of the government in the economy and somebody like KT Lee were critical. The United States and other foreign countries invested in Taiwan. American investment firms set up joint ventures

with the Taiwanese government to build up the island's technology firms. And while the politics could get complicated, the U.S. generally supported Taiwan's democratization. The U.S. was invested there, and a lot of countries benefited from the Taiwan miracle. They want to be indispensable. And when I mentioned before about moving up the

value chain, Taiwan moved up from labor-intensive things to high-tech industries. Minwu eventually raised over $80 million from venture capital firms in Taiwan. So I built the first factory, six-inch fab in park. I started running full. He was at the forefront of a revolution. By the late 1990s, semiconductor factories were popping up all over Taiwan. Hey there, tube heads, wake up. You know that $49.95 check that Granny sent you? You know that'll get you your very own Nintendo Entertainment System.

Get one and you can play the new Mega Man 6 and battle evil robots. Now that he was making his own semiconductors, the highest quality, he would add, Min's deal with Nintendo got bigger and bigger. Eventually, Macronics International in Taiwan became the largest supplier of semiconductors to Nintendo. Get the NES. You have one of these guys here. Do you recognize this here? Nintendo, yes. This is a Switch.

This is a Switch. Yes. How many of your semiconductors roughly are in this guy here? Well, every year I'm shipping about 100 million units to them. This is Zelda Breath of the Wild. So this is the best video game ever made, and you're telling me one of your semiconductors is inside the best video game ever made?

Or maybe two, and another one could be controller, and both from me. Amazing. In 10 years, when I started my company in 10 years, I grew from zero to $1 billion in 10 years. I was the first Taiwanese businessman on the cover page of the Forbes. We mixed a U.S. technology base with Taiwanese manufacturing technology, explains Wu. Today, Macronix has a stock market capitalization of $2 billion. Hsinchu Park marked a turning point. Located near top universities and government research institutes and offering low-cost land, green vistas, and a minimum of bureaucracy, the technology park helped to reverse Taiwan's brain drain.

Today, Hsinchu Park, with more than 200 companies and 72,000 workers, is overflowing. By the start of the 21st century, Taiwan's transformation into a technological powerhouse was complete. The technocratic vision of KT Lee worked. Today, Taiwanese companies produce almost all of the world's supply of advanced semiconductors. Macronix Inc., Min Wu's company, is valued at close to $58 billion. Taiwan's success makes it one of the most strategically important places on Earth. It's a blessing and a curse. Protection and attention.

If the supply of semiconductors gets janky, then it could have a devastating effect on the economies of countries like the U.S. or China. As you can imagine, this only heightens the drama between the two. Now, tensions between the U.S. and China over Taiwan are peaking. In the latest, Beijing has now issued fresh warnings on the issue. China's guns exploded with anger once again near Taiwan. More war games after another U.S. congressional delegation landed in Taipei. Some experts are now saying that China's behavior suggests that they might be willing to do anything to take over Taiwan. Taiwan, they consider a province of China

that was stolen by the Japanese and then occupied by the government that lost the civil war and then protected by the United States, which is preventing it from being reincorporated into China. Beijing's communist leadership claims the democratic island as its own and threatens to unify Taiwan with the mainland by force. So the PRC talks about reunification when they talk in English.

In Chinese, it just means unification. Reunification. But the people in Taiwan say, Taiwan has never been part of the People's Republic of China. So you can't reunify us because we've never been unified by you. You know, it walks like a duck, it quacks like a duck, but nobody dares call it a duck. And Beijing gets really angry if people sort of give Taiwan credibility as an independent sovereign country. And the U.S. under Trump and now is continuing to really raise the profile of Taiwan in American global politics.

China's attitude is, if we invade Taiwan, we're not invading a sovereign country. There is no sovereign country called Taiwan. And hardly anybody recognizes the Republic of China as a sovereign country. It's not a member of the UN, you know, so don't tell us what to do. It's purely a domestic matter. But at the same time, China does lots of business with Taiwan. They buy Taiwanese computer chips just like the rest of the world. And so there is an argument that because Taiwan has made itself a semiconductor powerhouse, invading Taiwan would be irrational for China. We ran this theory by Tom Gold.

What is rationality? You know what, we may think something that somebody's doing is crazy, but in terms of their frame of reference, it's perfectly logical, perfectly rational. And don't tell us what to do. And, you know, the Chinese attitude is, well, the U.S. created the post-World War II international system. And, yeah, we've done really well with it, but the time for American hegemony has passed. And it's, you know, we don't want a superpower running the world and telling us what to do. And we're going to go our own path you know and that's rational from our standpoint That's it for this week's show. I'm Ramtin Adabduli.

And I'm Kenny Malone. This has been a special collaboration between Planet Money and ThruLive. Thanks for doing this, Kenny. It is absolutely my pleasure. Thanks for doing this, Kenny. It is absolutely my pleasure. Thanks for letting me be here. Per usual, this episode was produced by Rand, me, and the amazing ThruLine team, which includes... Lawrence Wu.

Julie Kane. Anya Steinberg. Yolanda Sanguin. Casey Miner. Kristina Kim. Devin Kadiyama. Sanjukta Kottar. Fact-checking for this episode

was done by Kevin Volkl. Thanks to Irina Huang and Sam Yellowhorse Kessler for their voiceover work. Thanks also to Micah Ratner, Tamar Charney, and Anya Glemming. Special thanks to John Ruich, Nishant Dahiya, Shelley Rigger, James Lin, and

Tao Chen Dong for helping us get this story right. An extra special thanks to Kenny Malone for co-hosting and to Jess Jang, Sam Yellow Horse Kessler, and the rest of the Planet Money team. If you don't already subscribe to Planet Money, you definitely, definitely should. They have amazing episodes, including one on the history of a carried interest loophole in the American tax system, they managed to make anything in economics interesting. This episode was mixed by Josh Newell.

Music for this episode was composed by me and my band Drop Electric, which includes Anya Mizani, Naveed Marvi, Sho Fujiwara. And finally, if you have an idea or you like something you heard on the show, please write us at Thanks for listening. you you you