Generalizations are dangerous. To view any community, country, or region through a reductive lens risks losing the vibrant diversity and contradictions that define it. Yet, comparisons are inevitable, especially when observing societies shaped by innovation. Comparisons, however imperfect, can also illuminate. North Asia—home to Japan, South Korea, Taiwan, and China—offers a fascinating case study in contrasts, particularly in technology. Often mentioned in the same breath, Korea and Taiwan are lumped together like Tweedledee and Tweedledum as twin titans of hardware innovation. But beneath this shared narrative lies a divergence—a fundamental difference in their approaches to business, innovation, and even how their locals invest locally, giving rise to a completely different corporate culture. After discussing Korea in the last note, it is almost imperative to turn to Taiwan's uniqueness!
The Jensen Huang Moment and the Legacy of Heroes
Every society's story is marked by the emergence of individuals who encapsulate its core strengths and aspirations. While North Asia boasts a wealth of cultural and technological icons, it is rare for the region's business leaders to ascend to the status of national heroes. Taiwan stands as an extraordinary exception. Through its corporate luminaries, Taiwan showcases a robust capitalist ethos, entrepreneurial vigor, and its unique position as a leader in the modern innovation era. These heroes illuminate what sets Taiwan apart and solidifies its place as one of the greatest beneficiaries of the global tech revolution.
For Taiwan tech, this began with Maurice Chang, the visionary founder of TSMC, and Terry Gou of Foxconn, who redefined the island’s role in global supply chains during the 1990s and 2000s. Their contributions laid the groundwork for Taiwan’s emergence as a manufacturing and semiconductor powerhouse.
Jensen Huang of NVIDIA and Lisa Su of AMD, both born in Taiwan but otherwise all American, lead companies whose ascendance is intimately entwined with the island nation's technological prowess. Once dismissed as mere makers of commodity hardware, NVIDIA and AMD, under their leadership, have transformed GPUs into the beating heart of the AI revolution. Their assertiveness, a reflection of both individual drive and burgeoning innovation focus as the method to stay ahead, reverberates throughout Taiwan's tech ecosystem.
The Rise to Assertiveness: Lessons from the Indian Example
A society's journey to assertiveness is often paved with the milestones of its collective achievements. A subtle yet profound shift occurs as a nation accumulates successes and its people gain recognition on the world stage. Confidence blossoms, self-belief takes root, and a quiet determination emerges to claim one's rightful place.
This phenomenon is vividly illustrated by the rise of the Indian diaspora. Once perceived as merely a source of skilled labor, Indians have ascended to leadership positions across the globe, shattering stereotypes and redefining perceptions. This success has not only instilled a sense of pride within India but has also translated into a newfound assertiveness in its global interactions.
India's assertiveness is there for all to see in geopolitical realms. In business, particularly technology realms, Taiwan exhibits this assertiveness that one does not see from any of its neighbors, with Korea being the most contrasting exception. For decades, Taiwanese companies operated with quiet diligence, content to be the reliable backbone of the global supply chain. But as their technological prowess grew, so did their self-assurance. The success of companies like TSMC, MediaTek, and Foxconn, coupled with the emergence of leaders like Jensen Huang, has emboldened a new generation to step out of the shadows and claim their rightful place in the sun.
Not Just Commodities or Faceless Suppliers
For much of its history, Taiwan's tech industry was often viewed as an anonymous cog in the global machinery, an efficient yet replaceable link in sprawling supply chains. Nowhere was this more apparent than in the early years of the smartphone revolution, when Foxconn, assembling Apple’s iPhones, earned a fraction of the value derived from the final product. While Apple raked in margins exceeding 30%, Foxconn’s razor-thin profits reflected the perception that its role—despite being essential—was interchangeable, merely a commodity in the assembly line.
But Taiwan’s narrative has changed. It is no longer just about cheap labor or abundant capacity but about mastery. The perfection of processes honed over decades, the ability to achieve near-zero defect rates in mass production, and the agility to scale innovations faster than global competitors have set Taiwanese companies apart. Nowhere is this more evident than in TSMC, which commands more than 60% of the global semiconductor foundry market. While its competitors scramble to replicate its 5nm and 3nm process technologies, TSMC has already moved on to advanced nodes with pricing power to match. TSMC doesn’t negotiate on price—it dictates, with confidence rooted in its irreplaceability.
This expertise is not confined to the industry giants. Mid-cap firms like Delta Electronics and Lite-On Technology exemplify Taiwan’s depth in high-precision manufacturing. Delta has carved out a global niche in power management and renewable energy systems. Largan's relentless pursuit of optical perfection has kept it the leader in smartphone camera lenses for over a decade. Initially seen as another maker of commodity electronics, Lite-On has shifted its focus to advanced optical and power technologies. In smaller-cap spaces, Phison Electronics, a leader in NAND flash controller chips, has become indispensable to global storage manufacturers. Similarly, once seen as just another OEM for keyboards and peripherals, Chicony Electronics has transitioned to creating premium imaging modules and smart home solutions.
What sets Taiwan apart is that this collective expertise is not siloed—it cascades through its entire ecosystem. Taiwan’s mid- and small-cap firms feed into giants like TSMC, MediaTek, and Foxconn, enabling the seamless integration that competitors envy but cannot replicate. While the perception of Taiwan as a commodity supplier still lingers in some quarters and may re-emerge as a dominant argument when the hardware cycle turns, the reality is clear: Taiwan now supplies not just products but indispensable value. Its pricing power will continue to have ups and downs but in a range different from before.
The era of the faceless supplier is over. Taiwan has found its voice through its latest heroes, and it is speaking with a quiet confidence that resonates worldwide.
The Ecosystem of Excellence and Entrepreneurship
Taiwan’s entrepreneurial ecosystem is the lifeblood of its technological dominance. Unlike the sprawling conglomerates of Korea or the legacy-bound corporations of Japan, Taiwan’s innovation story begins with its small entrepreneurs. These are individuals and small firms who, often with modest beginnings, identify and exploit niche opportunities within the global supply chain. Some ventures, like TSMC or Foxconn, have grown into global giants. Still, the entrepreneurial spirit that drives them remains rooted in the country’s culture of calculated risk and relentless refinement.
This entrepreneurial ethos is nurtured by a domestic retail investor class in financial markets that stands apart from those in the neighboring nations. While Korean and, to a degree, even Japanese and Chinese nationals often exhibit extreme caution and conservatism while investing in local equities, Taiwan’s retail investors display a pronounced risk appetite and a notable home bias. Taiwan's economic policymakers have also shown more awareness of the importance of market valuations than others in the region.
One example should suffice: In the mid-2000s, Taiwan undertook significant reforms in its Employee Stock Ownership Plan (ESOP) accounting practices to address long-standing investor concerns about transparency and financial integrity. Before these reforms, many Taiwanese companies issued stock options to employees without accounting for the associated costs in their financial statements. While this practice incentivized talent, it led to distorted earnings figures. The reforms, spearheaded by regulatory authorities, mandated the expensing of stock-based compensation, aligning Taiwan’s accounting practices with international standards such as IFRS. Compare this with the arguments made in our previous article on the Korean "Value Up" resistance even two decades later in making the board more responsible for shareholder interests.
The vibrancy of Taiwan’s venture capital scene is another critical pillar of its ecosystem. Startups in Taiwan do not need to look far for funding or resources. Local venture capital firms and angel investors actively fuel early-stage ventures. The Hsinchu Science Park, often dubbed Taiwan’s Silicon Valley, epitomizes this spirit of interconnectedness. Research institutions, small enterprises, and established tech giants converge within this hub, enabling rapid prototyping, knowledge transfer, and the seamless scaling of ideas.
Taiwan's ecosystem isn’t just about funding and innovation hubs; it thrives on the dynamism of its supply chain. The tightly integrated network of suppliers and manufacturers across industries allows entrepreneurs to identify and fill gaps in products and services quickly. For instance, firms like E Ink Holdings, which specializes in electronic paper display technology, or Advantech, a leader in industrial IoT, have carved out dominant niches by responding to specific market demands. These companies didn’t emerge in isolation; they are products of an environment where collaboration and competition coexist, fostering continuous improvement.
Taiwan and Neighbors in Innovation Segments: A Comparison
As said before, any generalization is fraught with dangers, and the reductive characterization in every cell below is inherently debatable. On closer scrutiny, such simplifications may seem unfair to the myriad of players in these systems who embody their opposites. But, in the context of broader trends and overarching behaviors, the table seeks to highlight defining contrasts that help illuminate the distinct paths Taiwan, South Korea, Japan, and China have taken in their innovation journeys, particularly in the realms of supply chains, corporate structures, and market dynamics.
Conclusion: Taiwan’s Momentum in a High-Base World
As we look toward 2025 from the elevated base of 2024, the global tech industry finds itself at a moment of reckoning. Earnings and valuations, pushed to remarkable highs by the AI and semiconductor booms, are facing a new reality: slower growth, tighter margins, and rising competition. Yet, amid this landscape, Taiwan stands as an outlier, forged through decades of accumulated expertise and strengthened by the interconnectedness of its ecosystem, all translating into a secular trend.
As 2025 unfolds, Taiwan is not just weathering the high-base challenges of 2024—it is thriving, setting the stage for what could be its most defining era yet.
