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Taiwan faces a global feud. Its defense may be its powerful semiconductor industry

A MARTINEZ, HOST:

Semiconductor chips are in just about everything from cars and laptops to satellites and even nuclear weapons. The little things literally power the world we live in. And they're almost all made in one place, Taiwan. In a special collaboration between NPR's Throughline and Planet Money, hosts Ramtin Arablouei and Kenny Malone tell us the story of how Taiwan became the world's semiconductor superhub, and also about the man who helped lead the way.

RAMTIN ARABLOUEI, BYLINE: 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.

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UNIDENTIFIED SINGER: (Singing in non-English language).

TOM GOLD: Taiwan refers to one large island and several offshore islands about a hundred miles off the east coast of mainland China. 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.

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UNIDENTIFIED NARRATOR: 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.

ARABLOUEI: Taiwan has long been a chess piece in East Asian geopolitics. 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.

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ARABLOUEI: 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.

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ARABLOUEI: 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.

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ARABLOUEI: 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.

GOLD: And you had an influx of about 2 million more civilians and soldiers from the mainland who settled in Taiwan, expecting not to stay there but to go back.

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GOLD: But obviously, they haven't gone back to this day. And that has led to all sorts of political, social, economic consequences. So that's where K.T. Li came in.

ARABLOUEI: Li Kwoh-ting, otherwise known as K.T. Li, is sometimes called the father of Taiwan's economic miracle - the man who saw the future.

GOLD: He took the risk of coming with the government to Taiwan because he didn't want to stay in China under the Communists.

KENNY MALONE, BYLINE: K.T. Li 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, K.T. Li 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 K.T. Li.

GOLD: He told me that he was teaching a class at National Taiwan University, which is the premier university. 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.

MALONE: He had this vision of Taiwan being a technological hub in East Asia.

GOLD: Taiwan had to advance to the next stage, and that was going to be technologically intensive industries.

MALONE: But you can't build a tech industry without engineers. And by the late '70s, many Taiwanese engineers had left and gone abroad.

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ARABLOUEI: So what did K.T. Li do? He crossed over the Pacific to try and bring them back.

GOLD: Taking delegations to Silicon Valley and Route 128 outside Boston and Austin, where you had Texas Instruments, bringing these people from Taiwan together and saying, look, if you come back to Taiwan, you know, we will supply you with laboratories. We'll supply you with all of the infrastructure that you need.

ARABLOUEI: It was kind of an easy sell.

GOLD: 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 they - English was not their first language, because they were immigrants. But if you come back to Taiwan, we're creating a new industrial park. So that's where a lot of people - engineers went back 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.

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MALONE: By the start of the 21st century, Taiwan's transformation into a technological powerhouse was complete. The technocratic vision of K.T. Li worked. Today, Taiwanese companies control almost all of the world's supply of advanced semiconductors.

ARABLOUEI: 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.

(SOUNDBITE OF MUSIC) Transcript provided by NPR, Copyright NPR.

Ramtin Arablouei is co-host and co-producer of NPR's podcast Throughline, a show that explores history through creative, immersive storytelling designed to reintroduce history to new audiences.
Kenny Malone
Kenny Malone is a correspondent for NPR's Planet Money podcast. Before that, he was a reporter for WNYC's Only Human podcast. Before that, he was a reporter for Miami's WLRN. And before that, he was a reporter for his friend T.C.'s homemade newspaper, Neighborhood News.