Facing twin challenges in semiconductors and drones, Taiwan needs a comprehensive strategy that addresses both economic security and national defense.

Taiwan’s semiconductor industry, often called its “sacred mountain,” underpins the “Silicon Shield.” The oft-cited figure that Taiwan produces 99% of the world’s high-end chips underscores global dependence — but also places Taiwan at the center of great-power competition.

Policy should move on two tracks. First, help partners such as the US diversify supply-chain risk. TSMC’s US fabs and collaborations in Japan can shift some capacity to friendly locations and reduce exposure from concentrating production in Taiwan.

Second, reinforce Taiwan’s own irreplaceability. That means sustained investment in R&D to extend leadership at sub-5nm and sub-3nm nodes, and building a more self-reliant domestic supply chain in equipment and materials to avoid being constrained in extreme scenarios.

While the US seeks to reduce sole dependence on Taiwan, it cannot detach from Taiwan’s capacity in the short term. Taipei can leverage that position to deepen dialogue with the US, Japan, and the EU. Participation in platforms such as the US-led “Chip 4 Alliance” allows Taiwan to help shape technology standards and export controls.

Taiwan must also track China’s ambitions. Beijing is investing heavily toward 70% chip self-sufficiency by 2025. Experts doubt a near-term catch-up with TSMC’s most advanced processes, but breakthroughs in key technologies could erode Taiwan’s edge. Coordinated export controls with the US, paired with faster next-generation R&D at home, can help preserve a significant lead.

In short, the path forward is balance: assist allies in diversifying risk to secure their support, while keeping critical technologies and capacity firmly in Taiwan’s hands to make the Silicon Shield more resilient.

On defense, drones have become central to modern warfare. Given limited territory and resources, a conventional force-on-force contest with China is untenable. Asymmetric capabilities are a necessity, and drones are a vital instrument.

Taiwan should accelerate the stand-up of “drone forces,” fielding large numbers of reconnaissance, strike, and counter-drone systems. Swarms of small drones can patrol the Strait to detect and intercept hostile drones or cruise missiles. Loitering munitions pre-positioned along likely landing areas can mount surprise attacks on assault forces. These low-cost, high-impact tools can strengthen defense resilience.

Industry can underpin this shift. Taiwan’s electronics and precision-manufacturing strengths support a domestic drone supply chain. The government’s “Drone National Team” initiative seeks to integrate private companies and defense units to speed R&D and mass production. Firms such as Thunder Tiger have unveiled military prototypes that can scale with sustained support.

International cooperation matters as well. Taiwan should seek roles in drone alliances or defense supply networks among democracies. With the US approving drone sales to Taiwan, next steps include technology and intelligence sharing with partners such as the US and Israel, and participation in joint exercises to absorb advanced concepts. Showcasing civilian applications — humanitarian aid, disaster survey — can also build partnerships and reduce reliance on Chinese products.

Counter-drone defenses must grow in parallel. Taiwan needs stronger detection and defeat systems, including radar, electronic jamming, and directed-energy options, to blunt potential swarms. Public readiness also matters: regular drills for responding to drone incursions, electronic disruptions, and air-defense alerts can harden society against psychological and information warfare.

Recent analyses of chip dominance and drone warfare highlight Taiwan’s unique position: a critical node in global high tech and a frontline in potential geopolitical conflict. The advantage lies in a world-class semiconductor base — a bargaining chip against external pressure. The challenge is to keep that edge while building credible self-defense to deter invasion.

The way ahead runs on two parallel tracks. Economically, deepen cooperation with democratic partners, diversify risks, and drive innovation to keep the semiconductor “sacred mountain” stable. In security, build flexible asymmetric power — especially in drones — to weave an impenetrable defense network.

Only by doing so can Taiwan safeguard its “dual fortress” amid complex US–China–Taiwan dynamics and secure sovereignty and prosperity. Taiwan’s chips are often called the lifeblood of the global economy; Taiwan now must show it can protect that lifeblood and meet future challenges with wisdom and resolve.