I have consistently regarded semiconductors as the most strategically valuable asset class in today’s world. In my economic framework, they have already surpassed steel and oil, becoming the third critical strategic resource. In the era of artificial intelligence and high-technology warfare, their importance is even more decisive.
From an economic perspective, semiconductors are not merely industrial inputs; they are a “productivity multiplier.” Whoever controls advanced chips controls computing power; whoever controls computing power controls the speed and precision of military decision-making. Modern weapons systems, whether missile guidance, drone navigation, electronic warfare jamming, or real-time battlefield surveillance, rely on high-performance, low-latency, and highly reliable chips for instant sensing and decision-making.
I pay particular attention to the growth data of the military semiconductor market. According to multiple research institutions, the global military and defense semiconductor market is estimated to be between USD 12-14 billion in 2025, and could exceed USD 30 billion by 2035, implying a compound annual growth rate of approximately 8%-11%. This growth rate is higher than the long-term average of the overall semiconductor industry. The main drivers include comprehensive upgrades in unmanned systems, satellite infrastructure, AI-enabled weapons, and electronic warfare systems.
However, what truly matters is not only market size, but also the “source of technology.” In my view, the importance of supply chains within the democratic camp is most evident in military technology. For example, for a missile to accurately strike a moving naval vessel at sea, it requires high-speed image recognition, real-time trajectory prediction, and anti-interference communication capabilities. These functions depend on advanced process chips and high-performance AI accelerators. If an authoritarian country can only access semiconductor technology that lags two or three generations behind, its chips will likely consume more power, deliver insufficient computing performance, and exhibit lower reliability. Under complex electromagnetic interference or GPS-denied conditions, guidance errors would increase significantly, reducing the probability of achieving precise strikes. On the battlefield, differences of just a few milliseconds in latency or a few meters in accuracy can determine success or failure. Not to mention the additional risks associated with potential backdoors embedded in chips or internal control mechanisms shaped by authoritarian systems.
This helps explain why advanced semiconductor supply chains are highly concentrated within democratic economies. With Taiwan Semiconductor Manufacturing Company at the core, Taiwan’s supply chain forms a deeply interdependent network with equipment and materials suppliers in the United States, Japan, and Europe. This is not merely commercial cooperation, but long-term capital collaboration built upon institutional trust. Advanced manufacturing processes require enormous R&D investment and cross-border specialization. Without the rule of law, strong intellectual property protection, and stable financial markets, it is difficult to sustain such a high-barrier ecosystem.
From an investment perspective, this structure creates a powerful moat. Military-grade chips must withstand high temperatures, vibration, and radiation, with reliability standards far exceeding those of consumer electronics. Such stringent specifications grant suppliers stronger pricing power and long-term contract visibility. I observe that advanced nodes in high-performance computing (HPC) and application-specific integrated circuits (ASICs) generally command higher gross margins than mature nodes, supporting a resilient long-term margin structure.
TSMC’s growth logic is not driven solely by consumer AI demand. Although its advanced processes manufacture AI GPUs and data center chips, dual-use technologies serving both civilian and military applications provide additional structural support. The United States spends over USD 2 billion annually on defense-related microelectronics, and this figure continues to rise. Advanced fighter jets and missile systems integrate millions of lines of code and complex sensor modules, making them highly dependent on chip quality and supply stability.
In my assessment, semiconductors have evolved from a traditional manufacturing product into “strategic capital.” They influence economic growth rates, military capability, and the balance of international power simultaneously. The integrity of supply chains within the democratic camp is therefore a core factor in sustaining technological leadership and global stability.
For long-term asset allocation, I view TSMC as one of the most structurally certain core assets amid global technological competition and geopolitical economic realignment. Its technological leadership, institutional environment, and deep supply chain partnerships form a durable competitive advantage. Given the continued expansion of AI and defense technologies over the coming decade, I remain confident in its growth momentum and long-term profitability.
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