박재훈투영인
·
4 months ago
Samsung, Are You Listening? “AI Is Booming, but It’s Ultimately in Taiwan’s Hands?” (Oct 31, 2024)
At 35, Harvard graduate Jung Yoon-seok had his pick of locations across Asia—including his home country of South Korea—to manufacture AI chips for his startup, Rebellions. Yet, he chose Taiwan. “Taiwan is small, and Taipei is even smaller, but everything moves incredibly fast there,” he says.And Jung is not alone. AI leaders like NVIDIA, Microsoft, and OpenAI are all focusing on Taiwan. They rely on Taiwanese firms to manufacture AI chips, build servers, and develop cooling systems. As a result, Taiwan’s stock market has been the hottest in Asia over the past year, led by TSMC (Taiwan Semiconductor Manufacturing Company) and Hon Hai (Foxconn).Some investors believe this $400 billion rally is just the beginning. Optimists argue that Taiwan has become the ChatGPT era’s core manufacturing hub, making it a key beneficiary of the AI boom.Former U.S. Commerce Department official Sean King puts it bluntly: “Taiwan is the engine that drives AI.”However, this success comes with risks. For the first time in decades, the global tech supply chain is shifting away from China—and instead, towards its smaller neighbor. As U.S.-China tensions escalate, many AI companies are reluctant to manufacture in China, giving Taiwan a strategic advantage. However, as Taiwan’s global significance grows, so does Beijing’s interest in reclaiming what it sees as “separated territory.”TSMC: The King of AI Chip ManufacturingTSMC is at the heart of Taiwan’s success story. As competitors Intel and Samsung struggle, TSMC has tightened its grip on the semiconductor industry, dominating the production of the world’s most advanced chips. Even NVIDIA’s CEO, Jensen Huang, acknowledges that only TSMC can manufacture its AI accelerators.But Taiwan’s AI dominance isn’t limited to TSMC. Several hidden champions play crucial roles in AI development:Quanta Computer – A key server manufacturerDelta Electronics – A leading power equipment providerAsia Vital Components (AVC) – A pioneer in computer cooling systemsThese companies are expected to thrive in the AI market, which is projected to reach $1.3 trillion by 2032.Edward Chen, chairman of First Capital Management, believes Taiwan’s AI boom will last longer than previous tech cycles. With TSMC playing a key role in choosing partners for firms like NVIDIA, he argues that Taiwan’s technology sector is reaching an entirely new level.Taiwan’s stock market performance reflects this shift. The Taiex Index has soared over 40% in the past year, far outpacing China, Hong Kong, India, and Japan.How Taiwan Became the AI Manufacturing HubTaiwan’s rise as a tech powerhouse dates back to the 1980s, when Japanese firms began outsourcing low-cost plastic toy manufacturing to Taiwan. As the economy grew, Taiwanese companies evolved into high-tech manufacturers. While some firms set up factories in China, they always kept their most advanced technologies at home.Meanwhile, U.S. trade restrictions on China have forced companies to seek alternatives, effectively pushing China out of key supply chains. In less than two years, China’s AI hardware industry has been virtually crippled.The numbers tell the story: In the first nine months of 2024, Taiwan exported more than twice the number of AI servers and GPUs as China—an unimaginable shift from just a few years ago.Why Tech Giants Are Rushing to Taiwan"Look at today’s cloud giants," says a tech analyst. "Microsoft, Amazon, Meta, and Google are all racing to catch up with ChatGPT, and they all rely on Taiwanese firms to build their servers."Market research firm IDC predicts that global spending on AI systems and services will more than double to $632 billion by 2028.Liu Fei-chen, a researcher at the Taiwan Institute of Economic Research, describes Taiwan as a “one-stop shop” for AI hardware. Companies can source everything they need without leaving the island.Put simply, Taiwan is the gateway to the AI-driven future—where global IT firms’ dreams become reality through Taiwanese technology.The Secrets of Taiwan’s SuccessWhat makes Taiwan’s tech firms so attractive to global giants like Amazon, NVIDIA, and Apple?Customer-First MentalityDuring the pandemic, TSMC had the perfect opportunity to raise chip prices but instead chose to minimize price hikes to maintain trust with customers.This “strategic, not opportunistic” approach solidified its reputation as a reliable partner.Adaptability & Quick TransformationFoxconn (Hon Hai) and Quanta were once known for assembling iPhones and MacBooks.Today, they prioritize AI server orders, proving their ability to shift with market trends.Aggressive Investment in the FutureCompanies like AVC, Delta, and Quanta allocate nearly half of their operating expenses to R&D.They are also expanding beyond Taiwan, with AVC investing $450 million in a new Vietnamese plant.Taiwan’s three-pillar strategy—customer trust, adaptability, and aggressive investment—has created an unstoppable AI powerhouse.AI’s Explosive Growth & Taiwan’s RoleAI demand is skyrocketing, but so are the challenges. NVIDIA’s latest AI server, the NVL72, costs a staggering $3 million per unit and generates extreme heat—a major technical challenge.Companies like Delta and AVC are now scrambling to develop cooling systems that can handle this unprecedented power consumption.Rodrigo Liang, CEO of Silicon Valley-based AI chip startup SambaNova Systems, highlights Taiwan’s geographic advantage:“If a startup founder flies to Taiwan looking for a manufacturing partner, they can meet Delta, AVC, and Quanta all in a single afternoon. The high-speed rail gets you from Taipei to Kaohsiung in just 1.5 hours.”This tight-knit ecosystem fosters fierce competition and rapid innovation—critical factors for Taiwan’s continued AI dominance.[Compliance Note]All posts by Sellsmart are for informational purposes only. Final investment decisions should be made with careful judgment and at the investor’s own risk.The content of this post may be inaccurate, and any profits or losses resulting from trades are solely the responsibility of the investor.Core16 may hold positions in the stocks mentioned in this post and may buy or sell them at any time.
