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Taiwan's Hidden Powers & Potential Threats · Cash Lads

• 0:01
  SPEAKER_00: Welcome to Cash Lads.
• 0:02
  SPEAKER_00: My name is Paul Malloy from BoxcoverTax.ie and this is Marcus Doyle from Clear Financial.
• 0:08
  SPEAKER_00: We're here to take the mystery out of money and finance with some history, some stories, and plenty of humour too.
• 0:20
  SPEAKER_01: Hello everyone.
• 0:22
  SPEAKER_01: How are you doing today, Marcus?
• 0:25
  SPEAKER_01: Good.
• 0:26
  SPEAKER_01: Well, for the moment anyway.
• 0:28
  SPEAKER_01: So today we're gonna have a little chat about Taiwan.
• 0:31
  SPEAKER_01: Taiwan is a we some of us in the in the 80s would have read read on the back of our radio sets made in Taiwan.
• 0:38
  SPEAKER_01: Or toys and everything.
• 0:40
  SPEAKER_02: It's either China or Taiwan.
• 0:42
  SPEAKER_01: But Taiwan is very, very, very close to China.
• 0:46
  SPEAKER_01: Imagine kind of like you know the Aran Islands off the coast of Galway.
• 0:51
  SPEAKER_01: Like it is quite close.
• 0:53
  SPEAKER_01: And it's it's very much gone its own way, uh, even though China believes it's still a part of uh Taiwan's part of China.
• 1:01
  SPEAKER_01: And we will be getting into all that.
• 1:04
  SPEAKER_01: But um, so it's it's it's quite a large island.
• 1:06
  SPEAKER_01: If you look at a map of uh of China, you'll see it's it's it's it's it's the largest island of China, much bigger than Hong Kong.
• 1:12
  SPEAKER_01: Um good sized population, uh, I think there's 23 million, which is big for European standards, but not overly big by by uh by by Asian standards.
• 1:22
  SPEAKER_01: Very fast growing economy.
• 1:23
  SPEAKER_01: Uh, we'll be getting into that.
• 1:25
  SPEAKER_01: Um, but what's what's what's interesting is that from from from about 1895 to 1945, so 50 years, uh Taiwan was a Japanese colony.
• 1:34
  SPEAKER_01: And China wouldn't have liked that.
• 1:36
  SPEAKER_01: Yeah, yeah, I suppose part of the China was China wasn't able to do anything about that, really, for for large periods because you know they were firstly they you know the the British and some of the other European um powers, you know, forced China into kind of trade concessions that they didn't want.
• 1:52
  SPEAKER_01: Then the Japanese took over kind of northern China from from from Korea into a place called Manchuria.
• 1:58
  SPEAKER_01: So so yeah, it might have bothered them, but there wasn't much they could do.
• 2:02
  SPEAKER_01: But they the the legacy that the the the Japanese left was a bit like uh you know seen from the life of Brian, you know, of what have the Romans ever ever done for us?
• 2:10
  SPEAKER_01: I'm part of the people's front of the J you the Judea people's front.
• 2:14
  SPEAKER_02: What have the Romans ever done for us?
• 2:15
  SPEAKER_02: But there's the aqueducts, yeah.
• 2:17
  SPEAKER_01: The Romans, education, yeah, and and suddenly yeah, so this kind of if you haven't seen the film, folks, it's uh Monty Python, but there's this kind of splinter group that are trying to, you know, uh free Judea from the Romans.
• 2:29
  SPEAKER_01: Romans, and there's about seven of them in a room, yeah.
• 2:32
  SPEAKER_01: You know, and and you know, the the he tries to get his guys going when one of the Romans ever done for us, and uh, like you said, they mentioned the aqueduct and the you know the irrigation and the roads.
• 2:44
  SPEAKER_01: Two groups that were the same, but because they were different, they were different, they didn't like each other.
• 2:47
  SPEAKER_01: Yeah, so I suppose you could say that Taiwan, uh I mean, I don't think any colony ever wants to be a colony, but there was you know a legacy of of very good roads built, of uh, uh a railway system, um, very good schools.
• 3:02
  SPEAKER_01: So there was a kind of a I suppose a culture of of education being very, very important, which became important for Taiwan.
• 3:09
  SPEAKER_01: Um, you know, they were you know good public health system, and interestingly, good tax system.
• 3:15
  SPEAKER_01: So they were they so people were used to paying taxes.
• 3:18
  SPEAKER_01: And the problem with some tax systems is the tax system's always been very, very weak.
• 3:23
  SPEAKER_01: And so states find it very difficult to raise any money, and if you can't raise money, you can't spend money.
• 3:28
  SPEAKER_01: So they they had um some some advantages.
• 3:31
  SPEAKER_01: I don't think that the Chinese would have behaved terribly well, um, as as most colonists don't.
• 3:36
  SPEAKER_01: But from 1945 to 1949, they really had about five crazy years because with the with the end of the um the war, the the the the the Japanese were gone, you know, and uh while this was going on, the Chinese Civil War was going on.
• 3:52
  SPEAKER_01: Um Mao and the communists were fighting uh uh General Shang Kai shek and his uh Kumantang.
• 3:59
  SPEAKER_01: And uh, well, Mao won.
• 4:01
  SPEAKER_01: And uh Shang uh Kai shek basically they they legged it, you know, uh to Taiwan.
• 4:08
  SPEAKER_01: That's where they went.
• 4:09
  SPEAKER_01: They went to Taiwan and um totally different kind of military system back then.
• 4:14
  SPEAKER_01: China wouldn't would have been quite far behind.
• 4:16
  SPEAKER_01: And um, but they they they the the new Taiwanese government they got to work and they they instituted very, very important land reforms um in the 1950s.
• 4:27
  SPEAKER_01: When we think of Ireland, you know, which was a a colony of Britain and we had these large you know absentee landlords, and you know, they have this the the haciendas in Latin America whereby you know one family owns you know hectares of land and you know all the peasants are just just working for land.
• 4:46
  SPEAKER_01: So it's it's these land reforms turned the farmers into you know, a lot of the small small farmers got land of at their own and they um they they excelled at it and they they raised the yields, and suddenly the the the country was kind of beginning to to get on its way, and in the um the Americans helped because who lost China was a big thing in America.
• 5:11
  SPEAKER_01: Like when America when China went communist in 1949, America now faced not just the Russians but the most populous country in the world as they were back then.
• 5:20
  SPEAKER_01: Um and the Democrats were in power at that time, and they were basically blamed for losing China on their watch.
• 5:29
  SPEAKER_01: And it was it was something that Richard Nixon, for example, would very successfully use to to hit the Democrats with to help promote his own um political career.
• 5:38
  SPEAKER_01: So it wouldn't be like the Republicans to blame Democrats for anything, wouldn't it?
• 5:41
  SPEAKER_01: Well, it's not the first time.
• 5:42
  SPEAKER_01: Um so you know the Americans helped with um you know uh import the American finance basically, they basically said, here's a credit card.
• 5:52
  SPEAKER_01: Here's a credit card.
• 5:53
  SPEAKER_01: So buy all the machinery you need, all the raw materials you need, all the electricity.
• 5:58
  SPEAKER_01: And so they started, you're you're seeing a country just build up its capacity and capabilities.
• 6:03
  SPEAKER_01: And in the 1960s, they kind of switched their focus.
• 6:06
  SPEAKER_01: Prior to the 1960s, they've been trying to do their own thing, try and do everything, which I was saying beforehand, it's very difficult for small countries to do everything.
• 6:15
  SPEAKER_01: Um, country like America can do practically everything because it's so big, so large and so large, exactly different parts of the country.
• 6:20
  SPEAKER_01: Different parts of the country do different things.
• 6:22
  SPEAKER_01: So they they started to focus on exports, and they they they manage their exchange rates, which we've talked about before.
• 6:30
  SPEAKER_01: Effectively, they kept their exports cheap for customers in other countries.
• 6:34
  SPEAKER_02: So they kept their currency low.
• 6:35
  SPEAKER_01: They kept their current, deliberately kept their currency low.
• 6:38
  SPEAKER_01: And um, you know, this was copied by Japan.
• 6:42
  SPEAKER_01: This was, you know, China have done have done the same later on.
• 6:46
  SPEAKER_01: We used to do it with the pen to be fair, we kept it low for we kept it we you keep it low to help your exporters create jobs, right?
• 6:52
  SPEAKER_01: But the the other side of that is now imports then are very expensive for for the for the local population.
• 6:58
  SPEAKER_01: But anyway, that's that's the road they they they chose.
• 7:02
  SPEAKER_01: They were very SM SME focused, uh, which I think we could say we are in Ireland as well.
• 7:07
  SPEAKER_01: Um, and that kind of contrasts uh when I of course when I say SME, I mean small, medium enterprises, small business basically was prioritized.
• 7:15
  SPEAKER_01: Uh unlike South Korea, with you know, um their very large companies like Samsung, for example, um that's that's the road that they went down when you know their their companies were flexible, there was intense competition on the island, um, you know, sharing knowledge, this kind of stuff, like you know.
• 7:33
  SPEAKER_01: Um so the the emphasis, and ironically, this is the emphasis that um uh in Ireland we say all our politicians are teachers.
• 7:42
  SPEAKER_01: Uh America said that.
• 7:45
  SPEAKER_01: Well, in America, um they're all lawyers, um, but in Taiwan and China they're engineers.
• 7:52
  SPEAKER_01: And so that's very much this whole idea.
• 7:54
  SPEAKER_01: It's not just that they invested in education per se, but they were more interested in advanced manufacturing than the works of you know uh William Shakespeare.
• 8:03
  SPEAKER_01: Um, so that was their their their whole thing, and they had these kind of vocational and technical colleges where people would learn skills that would they could then use in the uh in the economy.
• 8:15
  SPEAKER_01: Um so they you know there's a lot of cross-sections with Silicon Valley, so they would send young men and women to California to be educated, work in Silicon Valley, come back home with those new ideas, things they'd learn.
• 8:30
  SPEAKER_01: So very, very focused on kind of getting ahead and and and things like that.
• 8:34
  SPEAKER_01: And they they moved again in the 70s and 80s towards kind of highways, railways, ports, steel, chemicals, so heavy industry, which you might call.
• 8:44
  SPEAKER_01: Um, and of course, then come the 1970s and the oil crises.
• 8:48
  SPEAKER_01: So they um they went, well, hang on now, we we've we we've no oil, and we're the last, you know, uh, you know, the last ones to get any oil.
• 8:58
  SPEAKER_01: So we need to move our economy away from this kind of, like I said, construction type type industry, or you know, industries that took up a lot of oil and energy, and to move towards what you might call knowledge industries like the semiconductors that they they eventually have done.
• 9:14
  SPEAKER_01: And what's hard to believe throughout all this period where you know you can really see the economy going well, and you can imagine the ordinary person each year gets a bit more optimistic about you know their future and all that.
• 9:25
  SPEAKER_01: There was martial law in Taiwan up till 1987.
• 9:30
  SPEAKER_01: That is mad.
• 9:31
  SPEAKER_01: It's just unbelievable.
• 9:34
  SPEAKER_01: It must have started with with Shanghai-shek, I'd say, but with with when they when they moved over.
• 9:39
  SPEAKER_01: Uh like it's a real kind of military thing to be.
• 9:41
  SPEAKER_01: Very military thing, 40 years.
• 9:43
  SPEAKER_01: So they they very much then went down the the the democracy road, they very much embraced uh democracy.
• 9:49
  SPEAKER_01: And obviously, all this while they have big brother behind them, which is the United States, you know, and that was a very, very important security blanket, because you know, at this time, even in the 80s, China was still very weak.
• 10:03
  SPEAKER_01: The economy was still terrible.
• 10:05
  SPEAKER_01: Um, so they don't have didn't have the power they have today.
• 10:08
  SPEAKER_01: Um, a few, you know, we won't dwell on this too long, you know, but we we a few very important um uh entities were set up.
• 10:15
  SPEAKER_01: One was the Industrial Technology uh research institute or the IT bar I that acquired foreign technology that trained the engineers.
• 10:24
  SPEAKER_01: It was kind of like a it wasn't a company per se, but it was more kind of a institution.
• 10:28
  SPEAKER_01: It's like Enterprise Ireland or AI are put together.
• 10:32
  SPEAKER_01: Um they conducted research, um, you know, transferring commercial capabilities to China to Taiwanese companies.
• 10:38
  SPEAKER_01: Uh UMC was another one, it was a public research uh you know, moving that kind of research into practical uses.
• 10:46
  SPEAKER_01: Um the uh I'm not sure I'll pronounce this correctly, with uh the Shinju uh science park.
• 10:52
  SPEAKER_01: And and there was all these kinds of you had all these kind of cluster effects that you have in Silicon Valley.
• 10:57
  SPEAKER_01: Silicon Valley is not one or two companies, it's hundreds, yeah, hundreds, hundreds of companies.
• 11:02
  SPEAKER_01: So it's the same in Taiwan.
• 11:04
  SPEAKER_01: You keep all these companies together, their employees kind of move from company to the other one to the other, knowledge moves around, and it's it's fair, it creates just incredible growth.
• 11:14
  SPEAKER_01: I mean, just to give you an idea, the I think from most for 2025 up till you know early 26, they had a growth rate in Taiwan, 13%.
• 11:24
  SPEAKER_02: Jeez.
• 11:25
  SPEAKER_01: So, um, so so just incredible.
• 11:27
  SPEAKER_01: And and and moving on to a very important man, uh Maurice Chang, he worked with Texas Instruments and the States for 25 years.
• 11:37
  SPEAKER_01: It sounds like he was passed over for a promotion.
• 11:38
  SPEAKER_01: He was Taiwanese originally, and he they brought him home and they put they put him in charge of the ITRI, which is the Industrial Technology Research Institute, I imagine.
• 11:47
  SPEAKER_01: And um this became TSMC, and they just took off.
• 11:52
  SPEAKER_01: They just took off.
• 11:52
  SPEAKER_01: And what they what they did very, very well was um they just focused on manufacturing.
• 11:59
  SPEAKER_01: So I was saying to you beforehand that let's say you have an idea for a specialized chip that's going to improve battery life.
• 12:06
  SPEAKER_01: I told you this in strict conference, Paul.
• 12:08
  SPEAKER_02: This is top secret.
• 12:10
  SPEAKER_02: I'm working on this.
• 12:11
  SPEAKER_01: You ain't the only one trying.
• 12:12
  SPEAKER_01: You ain't the only one trying.
• 12:13
  SPEAKER_01: And your big problem is okay, I know how to build this, I know how to get my customers, but I don't know anything about running a factory.
• 12:20
  SPEAKER_01: How do I knock out 100,000 chips a year?
• 12:23
  SPEAKER_01: And so that's what they did.
• 12:24
  SPEAKER_01: They are the manufacturing industries, palm oil industries, yeah.
• 12:28
  SPEAKER_01: Play stage in China for a fee, um, you know, we'll make your semiconductors and or what or you know, chips, whatever you want.
• 12:37
  SPEAKER_01: And they um because they never designed their own, they very deliberately did this.
• 12:43
  SPEAKER_01: They said, We are just the manufacturers, you design it, you sell it, we'll make it.
• 12:49
  SPEAKER_01: And um, you know, with with with chips, apparently, I didn't realize this actually, there's a huge amount of chips that get damaged in the production process.
• 12:57
  SPEAKER_01: A huge amount.
• 12:58
  SPEAKER_01: The typical you can lose up to 40% of what you've made.
• 13:01
  SPEAKER_02: That is madness, which is a heck of a waste, isn't it?
• 13:04
  SPEAKER_02: It is, it's it sounds like the water being lost in in Dublin and Ireland.
• 13:07
  SPEAKER_02: Well, 40% out of the house.
• 13:09
  SPEAKER_01: 40%, yeah.
• 13:10
  SPEAKER_01: Um, hard to believe.
• 13:12
  SPEAKER_01: But um, they're particularly good at that because they really excel at manufacturing, and you can trust them because they're not going to steal your idea.
• 13:19
  SPEAKER_01: It's like Homer Simpson, you know, he's in the Simpsons and some guys, you know.
• 13:22
  SPEAKER_01: You're trying to steal my idea, and Homer goes, no, no, and then you hear him talking to himself, yeah, metal out, steals idea.
• 13:27
  SPEAKER_01: Um, so they're they've no no no interest in that.
• 13:31
  SPEAKER_01: And so they're just looking to to build trust with their with their with their customers, and I don't know how they're um getting through it, but the amount of orders they have.
• 13:42
  SPEAKER_01: I mean, the the the chap the head of Nvidia uh he was over Taiwan very, very recently, you know.
• 13:46
  SPEAKER_01: So they have all these partnerships with a lot of the AI companies and uh AMSL in Holland, AMD in the States.
• 13:53
  SPEAKER_01: So so they're just they're it it's they're just oh it's not just TSMC.
• 13:57
  SPEAKER_01: TSMC is is in it, the Taiwanese um Taiwan's semiconductor manufacturing company, TSMC.
• 14:07
  SPEAKER_01: Many people won't have heard but but this is the company we've just been talking about who is is it's just doing it.
• 14:12
  SPEAKER_02: Obviously, doing all the stuff in the background probably suits them, they don't want to be famous.
• 14:16
  SPEAKER_01: Yeah.
• 14:16
  SPEAKER_01: That's just the road that that's the road they've just want to make it and make the money.
• 14:19
  SPEAKER_01: That's the that's the road they've taken, and it's it's it's worked out uh you know very well.
• 14:23
  SPEAKER_01: I mean, like they they they they're just uh fantastic in engineering.
• 14:27
  SPEAKER_01: They they they seek out problems if there's in production as soon as they can find them.
• 14:31
  SPEAKER_01: Very, very high performance standards.
• 14:34
  SPEAKER_01: I'd say working there would be quite challenging, you know, no matter no matter what your capabilities are, they push you pretty hard, uh, work closely with customers.
• 14:41
  SPEAKER_01: So they've they've they've they've done all this stuff.
• 14:44
  SPEAKER_01: They're excellent at manufacturing.
• 14:46
  SPEAKER_01: Now they're not the only company in the chip industry, you know.
• 14:50
  SPEAKER_01: The the Americans are particularly good design, you know, that's that's one of their things.
• 14:54
  SPEAKER_01: South Korea has a huge lead in the area of memory chips.
• 14:58
  SPEAKER_01: Um, Netherlands has this company, ASML, that excel in advanced lithography.
• 15:03
  SPEAKER_01: And there was talk recently of uh one of their machines ending up in China, and and you know, the the the Dutch are basically beholden to the Americans on this, and the Americans said you will not let China get one of these machines.
• 15:15
  SPEAKER_01: They the lithography basically it kind of shrinks or compresses the chips.
• 15:19
  SPEAKER_01: And these are the these are the yeah, these are the AI chips and things like that that are so so important.
• 15:24
  SPEAKER_01: So um we might move on to the fact that um Taiwan has a big a big another big brother who's not so friendly, um, which is China.
• 15:36
  SPEAKER_01: And the the uh the Chinese have their eyes on on Taiwan.
• 15:40
  SPEAKER_01: Lovely family affair.
• 15:41
  SPEAKER_01: Well, so the president of China, Xi Jinping, who's in his third term, and I think is probably globally one of the most respected leaders in the world, if not the most, um, he very much wants someday to bring Taiwan home.
• 15:54
  SPEAKER_01: A bit like England seeing football team.
• 15:57
  SPEAKER_01: He wants to bring it home, but just not in a fun sport way, but more in a kind of a militarily uh uh rough way.
• 16:05
  SPEAKER_01: But you know, part of it is you know, nationalism and ideology.
• 16:09
  SPEAKER_01: China just believes Taiwan is ours.
• 16:14
  SPEAKER_01: Um strategically speaking, there's kind of like an island chain down from Japan in the north, all the way south to Taiwan, and then over towards the Philippines.
• 16:24
  SPEAKER_01: So strategically, China would love to love to have this.
• 16:28
  SPEAKER_01: Um, one of the biggest issues, I think, is that Taiwan is a very prosperous, uh, ethnically Chinese democracy.
• 16:36
  SPEAKER_01: And that kind of doesn't look good for for China.
• 16:41
  SPEAKER_01: You know, it's it's a bit like you get on the dance floor with one of your mates, and all the girls are looking at him, not you, you know.
• 16:47
  SPEAKER_01: So um they sorry about that, Paul.
• 16:51
  SPEAKER_01: So just stay off the dance floor.
• 16:53
  SPEAKER_01: There's a bit of jealousy there, and I think don't I don't think anyone should underestimate how big a motivation that is for China.
• 16:59
  SPEAKER_01: Um, and then finally the the Brucey bonus um from player cards, right?
• 17:05
  SPEAKER_01: Bruce uh Foresight is the semiconductors, which is not an area currently of great strength for China.
• 17:11
  SPEAKER_01: Now that may change in time, but it's not they're quite further.
• 17:16
  SPEAKER_01: So Xi Jinping has basically said to his military, the People's Liberation Army, um, I want you to be capable, not I want you to invade, but I want you to be capable of invasion in 2027.
• 17:33
  SPEAKER_01: And we're halfway through 2026.
• 17:35
  SPEAKER_01: Yeah.
• 17:35
  SPEAKER_02: So it's it's is it one of the problems the sea between China and Taiwan is quite shallow?
• 17:41
  SPEAKER_01: So the direct line, if you draw a line directly from China the co the the Chinese coast, um I presume this is true.
• 17:46
  SPEAKER_02: I've heard this before.
• 17:49
  SPEAKER_01: There's there is there's the there's no kind of deep ports.
• 17:52
  SPEAKER_01: So if China's very, very heavy kind of ships, they're not going to get very far.
• 17:59
  SPEAKER_01: So they'll have to come at them a different way.
• 18:00
  SPEAKER_01: And there's a few different things that that is being you know spoken about at high levels, not just in China but all around the world, because obviously the Americans are keeping a close eye on this.
• 18:09
  SPEAKER_01: Um I you know, China could take an island, one of Taiwan's islands, and just see how everyone reacts.
• 18:17
  SPEAKER_01: How will the American Americans react, how will Taiwan react?
• 18:20
  SPEAKER_01: They could try a quarantine, um, which is where the Chinese basically say any ships coming into Taiwan, they have the right to inspect that ship.
• 18:29
  SPEAKER_01: Cuba potentially turns so we're we're we're we're we're similar language to the Cuba missile prices of 1962, where America put a quarantine around um Cuba, which really was a blockade.
• 18:43
  SPEAKER_01: Blockade is a much more aggressive stance, it's really blocking off everything, blocking off the oil, blocking off the natural gas.
• 18:49
  SPEAKER_01: It's not an invasion, but it's very aggressive.
• 18:52
  SPEAKER_02: You're controlling the whole situation.
• 18:54
  SPEAKER_01: It's very aggressive.
• 18:54
  SPEAKER_01: I'd be amazed if they if they if they went for and then semiconductors will go up and price them.
• 18:59
  SPEAKER_01: Semiconductors will go up and price for sure.
• 19:02
  SPEAKER_01: They could try decapitation like Trump has done in Venezuela, where you just take out the leadership.
• 19:06
  SPEAKER_01: Doesn't work.
• 19:07
  SPEAKER_01: There's a lot of people in in Taiwan, um, they have an ex behind Ukraine, they would have one of the better drone industries.
• 19:15
  SPEAKER_01: So the Taiwanese army that gets there is going to be hit with, you know, if if you can remember saving Prior Ryan at those first five minutes where you see very realistic, yeah, or felt very realistic.
• 19:27
  SPEAKER_01: That kind of thing.
• 19:28
  SPEAKER_01: I wouldn't want to be in the first 10,000 Chinese soldiers.
• 19:31
  SPEAKER_01: Yeah.
• 19:32
  SPEAKER_01: I've I've feeling I'd be up in my life insurance markets.
• 19:34
  SPEAKER_01: Um, if we're just gonna do that.
• 19:36
  SPEAKER_01: And then finally, with all the village you've had life insurance now, you'll be sorted.
• 19:40
  SPEAKER_01: Finally, they could try full invasion.
• 19:42
  SPEAKER_01: So only time will tell.
• 19:44
  SPEAKER_01: Being capable of something doesn't mean you're going to do it.
• 19:47
  SPEAKER_01: But I think it's more likely that G tries to do this before he finishes up than not.
• 19:54
  SPEAKER_01: I think it's more likely that he will try than not.
• 19:56
  SPEAKER_01: So we shall see.
• 19:58
  SPEAKER_01: But I think that's probably uh we're good to go for today.
• 20:01
  SPEAKER_01: So thanks very much for your time, Marcus.
• 20:02
  SPEAKER_01: That was that was hopefully that was interesting, folks.
• 20:05
  SPEAKER_01: And um, we'll see you next time, right?
• 20:06
  SPEAKER_01: Talk to you soon.