A system dynamics model of the semiconductor industry development in Taiwan

Abstract

Taiwan has become the fourth largest semiconductor manufacturer worldwide within only 25 years. Taiwan’s success in developing its semiconductor industry has been widely recognized. Building a semiconductor industry in a developing country is costly, risky, and requires long-term accumulations of capital, technology, human resources, and production capacity. The development process depends on environmental interactions, which should be studied in an integrated and holistic manner. Using system dynamics methodology, this study analyses the development experience of the Taiwanese semiconductor industry, in order to provide better insight into the long-term industrial development process. The study also simulates the proposed model in one historical setting and two future scenarios. Implications for the development of the semiconductor industry in Taiwan and other Asian countries are discussed.