|
Semiconductors in EU–Taiwan Relations: Bridging Gaps, Building Trust |
|
|
Taiwan is emerging as the cornerstone of AI infrastructure, while remaining the indispensable hub of global semiconductor manufacturing. In 2025, TSMC’s revenue reached $122 billion, with AI chips accounting for more than half of its growth. By 2026, Taiwan is producing nearly 90 percent of the world’s most advanced chips below 7 nm. As the European Commission prepares to unveil the second Chips Act by the end of May, this raises the question of how Europe can deepen its semiconductor partnership with Taiwan.
Today, the Chips Diplomacy Support Initiative (CHIPDIPLO), an 18-month project coordinated by Institut Montaigne and co-funded by the European Union, publishes a new policy paper: “Semiconductors in EU–Taiwan Relations: Bridging Gaps, Building Trust”. Authored by Dr. Mathieu Duchâtel, Director of International Studies at Institut Montaigne and Project Director of CHIPDIPLO, the paper draws on 40 interviews with European and Taiwanese stakeholders, as well as insights from an EU–Taiwan semiconductor industry dialogue held on the sidelines of SEMICON Europa 2025.
|
|
|
A strategic shift in EU–Taiwan semiconductor relations |
|
The paper examines a relationship which is moving beyond a model defined by European innovation and Taiwanese manufacturing scale toward a more strategic partnership shaped by economic security, supply chain resilience, and de-risking from China.
European companies such as ASML, Air Liquide, and Merck already play a critical role in Taiwan’s semiconductor ecosystem, providing essential equipment and materials for advanced chip production. This industrial integration is deepening through major projects, including the European Semiconductor Manufacturing Company (ESMC), a joint venture between TSMC, Bosch, Infineon, and NXP, alongside growing Taiwanese investment across Europe.
At the same time, Taiwan is strengthening its integration with the United States, with TSMC’s Arizona fab illustrating a relocation of production capacity driven by market forces and US policies. |
|
Key structural challenges persist |
|
Despite increased semiconductor trade and investment, Europe continues to be viewed relatively negatively in Taiwan, due to slow growth and high energy costs, misperceptions in EU-Taiwan relations, and a fragmented European approach to deepening relations with Taiwan. In this context, ESMC is widely seen in Taiwan as a test case of doing business in Europe.
Yet the paper also highlights strong complementarities between European and Taiwanese capabilities. As Europe accelerates investment in artificial intelligence and demand for advanced semiconductors grows, closer EU–Taiwan cooperation becomes a strategic priority. |
|
9 priorities to strengthen EU–Taiwan semiconductor cooperation |
|
The paper sets out policy recommendations for the European Union to address these constraints, improve coordination, and establish a partnership built on trust: - Seize the opportunities created by TSMC’s strategic transformation
- Recalibrate and scale up research cooperation
- Improve conditions to facilitate EU–Taiwan joint investment
- Strengthen downstream supply chain integration
- Enhance talent and human resources cooperation
- Send clearer market signals regarding demand projections
- Cooperate on foundational chips through demand-side policies
- Address fragmentation in engaging with Taiwan’s semiconductor ecosystem
- Overcome ambiguous signaling regarding China de-risking
|
|
|
About Institut Montaigne Institut Montaigne is a nonprofit, independent think tank based in Paris, France. Our mission is to put forward public policy proposals in order to shape political debates and decision making in France and Europe. We bring together representatives from government, civil society, the private sector, academia and the media to identify bold solutions to key policy challenges, holding ourselves to high standards of academic rigor. We promote a balanced vision of society, in which open and competitive markets go hand in hand with equal opportunity and social cohesion. Our strong commitment to representative democracy, citizen participation and European sovereignty and integration is the intellectual foundation that guides our research and recommendations. |
|
|
|
