Taiwan’s semiconductor dominance rests on something far harder to replicate than factories or financial firepower: a deeply embedded ecosystem that brings together capital, engineering talent, global customers and decades of accumulated technological expertise, said a former TSMC executive.In the latest episode of Taiwan Frontlines, launched by Taiwan Current News (TCN) in partnership with the German Marshall Fund of the United States (GMF), former TSMC R&D director Konrad Young (楊光磊) discusses why TSMC’s lead cannot be understood simply in terms of capital investment.Drawing on his own experience in the semiconductor industry, including two years as an independent board member at Semiconductor Manufacturing International Corp. (SMIC), Young examines the limits of government spending, the importance of talent and market scale, and why building a genuinely world-class semiconductor ecosystem may take decades rather than billions of dollars.Capital builds fabs but not ecosystemsTaiwan’s semiconductor industry occupies an unusually central position in the country’s economy, concentrating capital, engineering expertise and some of its strongest technical talent around an industry that has become strategically indispensable. Young said this concentration helps explain why TSMC has proved so difficult to challenge.Young noted that the central distinction is not simply how much money a country is willing to spend on semiconductors, but how effectively that capital is converted into technological capability.“Most people think capital can make something happen,” Young said. He agreed, “but only partially.”He said that his experience at SMIC informs the assessment. Although the Chinese foundry has spent heavily, Young said the money has not always been used efficiently.China also faces restrictions on access to some of the world’s most advanced semiconductor manufacturing equipment, including ASML’s extreme ultraviolet lithography (EUV) systems, putting its manufacturers at a technological disadvantage. TSMC CEO C.C. Wei shakes hands with Nvidia CEO Jensen Huang. (TCN) The limits of late-stage investmentYoung made a similar argument about the United States.The CHIPS and Science Act appropriated $52.7 billion for semiconductor manufacturing, research, workforce and related programs for fiscal years 2022 through 2027.But Young said such late-stage spending is less powerful than earlier investments that helped establish an industry in the first place. He added that the scale becomes clearer when compared with TSMC itself: the company generated $122.4 billion in revenue in 2025.Young’s criticism is not that government funding is meaningless. Rather, he stated that the impact of large investments diminishes when money is deployed at a later stage of technological development. The CHIPS Act’s roughly $52 billion, he noted, is small compared with the scale of TSMC’s business and its continuing investment in research and development.Taiwan’s advantage: a self-reinforcing industryYoung said TSMC’s spending is supported by a global customer base and recurring commercial revenue. For Young, this creates a self-reinforcing cycle: customers generate demand, demand generates revenue, and revenue finances further R&D, which leads to technological advancement.He estimated TSMC’s R&D spending at roughly 8% of revenue, amounting to around $10 billion a year at current scale. The underlying challenge for governments, he argued, is straightforward: Few, if any, can sustain that level of annual support for a single company.China, meanwhile, has one major advantage of its own: a vast domestic market that can help incubate a semiconductor industry behind export controls.Young does not rule out China eventually closing the gap. But given the accumulated experience embedded in semiconductor equipment and manufacturing, he said that catching up with TSMC will take considerable time: multiple decades.The broader lesson from his analysis is that semiconductor leadership cannot simply be purchased.It is accumulated through talent, customers, technological experience and the capacity to reinvest enormous sums in R&D year after year, a combination that has made TSMC and Taiwan’s semiconductor ecosystem around it, exceptionally difficult to replicate.For more in-depth coverage, tune in to Taiwan Frontlines on the NOWNEWS official YouTube channel.