"Beyond Borders: A Game Theoretic Exploration of TSMC's Role in China-Taiwan Tensions".
| Název práce v češtině: | "Beyond Borders: A Game Theoretic Exploration of TSMC's Role in China-Taiwan Tensions". |
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| Název v anglickém jazyce: | "Beyond Borders: A Game Theoretic Exploration of TSMC's Role in China-Taiwan Tensions". |
| Klíčová slova: | Čína, Taiwan, polovodiče, průmysl, geopolitika, teorie her |
| Klíčová slova anglicky: | China, Taiwan, semiconductor, industry, geopolitics, game theory |
| Akademický rok vypsání: | 2023/2024 |
| Typ práce: | bakalářská práce |
| Jazyk práce: | angličtina |
| Ústav: | Katedra politologie (23-KP) |
| Vedoucí / školitel: | doc. Martin Riegl, Ph.D. |
| Řešitel: | skrytý - zadáno vedoucím/školitelem |
| Datum přihlášení: | 05.03.2024 |
| Datum zadání: | 05.03.2024 |
| Datum a čas obhajoby: | 06.06.2024 07:00 |
| Místo konání obhajoby: | Areál Jinonice, B330, 330, seminární místnost IPS |
| Datum odevzdání elektronické podoby: | 30.04.2024 |
| Datum proběhlé obhajoby: | 06.06.2024 |
| Oponenti: | Mgr. Jakub Tesař, Ph.D. |
| Zásady pro vypracování |
| Topic Relevance:
The semiconductor industry is one of the foundational pillars of the modern technological world. Semiconductors, often referred to as integrated circuits or microchips, are the brains within every electronic device, from smartphones and computers to cars and military hardware. These tiny devices control the flow of electricity in electronic equipment and have become essential components of virtually all modern technologies. The relevance of the semiconductor industry, and in particular the role of Taiwan Semiconductor Manufacturing Company (TSMC), becomes even more pronounced when considering the strategic and economic implications. TSMC is the world’s largest dedicated independent semiconductor foundry, and it plays a pivotal role in the global supply chain for microchips. The company’s cutting edge technology and capacity to produce high-performance, energy-efficient chips make it a critical asset not only for consumer electronics but also for sectors such as defence, healthcare, and transportation. Given the strategic importance of semiconductors, the tensions between China and Taiwan take on a new dimension. China has always viewed Taiwan as a part of its territory, despite the self-governing status of the island. The semiconductor industry adds a layer of complexity to this relationship because gaining control over Taiwan would potentially give China access to TSMC’s advanced manufacturing capabilities. This has significant implications for global technological dominance and national security concerns, particularly for countries that rely on TSMC for their semiconductor supplies, most notably the United States. The game theoretic approach is particularly apt for analysing the China-Taiwan tensions in the context of the semiconductor industry. It allows for a strategic examination of the interactions between the different stakeholders, including TSMC, the Taiwanese government, and other global powers with vested interests in the region’s stability and in the security of the semiconductor supply chain. Game theory can help predict potential moves and countermoves by involved parties, considering factors like economic interdependence, military power, and diplomatic alliances. In a world where technology is increasingly intertwined with geopolitics, the semiconductor industry stands as a symbol of economic might and a key element of national security. The centrality of semiconductors to modern technology makes the Taiwan Strait not just a regional flashpoint but a concern for the global community, which has vested interests in ensuring the stability and security of this supply chain. Thus examining the China-Taiwan tensions through the lens of the semiconductor industry sheds light on broader issues of international relations, economic policy, and global security Research Question: To what extent does TSMC's dominance in the semiconductor industry shape the bargaining power of Taiwan in their geopolitical position to China and the rest of the world, and how is this reflected in game theoretic models? Theoretical Framework: With the use of Realism and Liberalism, I wish to complete the game theoretic models: ● Realism: ○ I would explore how the security dilemma plays out in the semiconductor industry, analysing how perceptions of threat and the pursuit of power influence the actions of China and Taiwan. ○ I would consider realist views on the zero-sum nature of international relations. How might China's gains in semiconductor capabilities be perceived as a loss for Taiwan and the US, and vice versa? This zero-sum perspective can complement the strategic interactions modelled in game theory. ● Liberalism ○ Liberalism, on the other hand, would be a very interesting way to analyse international cooperation, institutions, and the role of non-state actors, such as exploring how economic interdependence influences the behaviour of China, Taiwan, and TSMC in the semiconductor industry. ○ Analysing the role of international institutions and agreements in shaping the behaviour of the involved parties could show how global trade regulations and agreements might impact TSMC's operations and the responses of China and Taiwan. ○ Potential for mutual gains through cooperation in the semiconductor sector, and how liberal ideas of win-win solutions can be beneficial for both parties. Potential Hypothesis: ( Both Realism and Liberalism should be analysed) Hypothesis 1: "In game theoretic models of the China-Taiwan-TSMC dynamics, the presence of credible commitments from external actors, such as the United States, to defend Taiwan will influence the strategic calculus of China and Taiwan, potentially leading to outcomes characterised by a balance of power and deterrence." Realism: This hypothesis aligns more closely with realism, as it emphasises power dynamics, deterrence strategies, and the influence of external actors' commitments in shaping the strategic calculus of states. Hypothesis 2: "Game theoretic analysis of cooperative strategies in the semiconductor industry, focusing on TSMC's role, will demonstrate the potential for economic interdependence to act as a stabilising factor in China-Taiwan relations, contributing to outcomes characterised by cooperation and mutual gains." Liberalism: This hypothesis aligns well with liberalism, as it emphasises the potential for economic interdependence to foster cooperation and mutual gains between China, Taiwan and the US. I will try to emphasise the positive-sum nature of economic interactions and the potential for cooperation through trade and economic interdependence. Methodology: 1. Extensive Form Game: Sequential Move Model ● Description: This model represents the sequential decision-making process among China, Taiwan, TSMC, and the United States. It captures the dynamic nature of interactions where players make decisions sequentially, taking into account the actions of previous players. ● Construction: ● Identify the sequence of moves and decisions made by each player, including China, Taiwan, TSMC, and the United States. ● Define the strategies available to each player at each decision point, considering factors such as military escalation, economic coercion, and diplomatic negotiations. ● Specify the payoffs or outcomes associated with different combinations of strategies chosen by the players, reflecting their respective interests and objectives. ● Analyse the equilibrium outcomes using solution concepts such as subgame perfect equilibrium, considering the strategic interactions among all players. 2. Repeated Game: Iterated Prisoner's Dilemma ● Description: In this model, China, Taiwan, TSMC, and the United States engage in repeated interactions over time, facing the dilemma of whether to cooperate or defect in each round. ● Construction: ● Define the stage game (e.g., prisoner's dilemma) that is repeated over multiple periods, involving all players. ● Specify the strategies available to each player in each period, such as cooperation, confrontation, or negotiation. ● Determine the payoffs associated with different strategy combinations over time, considering the cumulative effects of repeated interactions. ● Analyse the equilibrium strategies and outcomes that emerge from repeated interactions, considering strategies like tit-for-tat or forgiveness mechanisms, and their implications for long-term relationships and cooperation. 3. Median Voter Theorem: Spatial Model ● Identification of Preferences: ○ Each stakeholder in the China-Taiwan-TSMC relationship has preferences regarding key issues such as sovereignty, economic interests, and security concerns. ○ China's preferences may prioritize territorial integrity, asserting control over Taiwan, and securing access to advanced semiconductor technology through TSMC. ○ Taiwan's preferences may prioritize maintaining sovereignty, preserving economic autonomy, and avoiding military conflict with China. ○ TSMC's preferences may prioritize maintaining its position as a global leader in semiconductor manufacturing, ensuring stability in its operations, and avoiding disruptions to its supply chain. ○ The United States' preferences may prioritize regional stability, protecting Taiwan's interests, and maintaining its strategic influence in the Asia-Pacific region. ● Positioning Along Preference Scale: ○ The Median Voter Theorem posits that in a political decision-making process, the outcome tends to reflect the preference of the median voter, or the voter whose preference falls in the middle of the preference distribution. ○ In the China-Taiwan-TSMC scenario, stakeholders' preferences could be positioned along a preference scale, with China's preferences on one end, Taiwan's on the other, and TSMC's and the United States' preferences somewhere in between. ○ For example, China's preference for complete control over Taiwan and TSMC's advanced technology might be positioned at one extreme end of the preference scale, while Taiwan's preference for maintaining sovereignty and independence would be positioned at the other extreme. ○ The United States' preferences may fall somewhere between these extremes, reflecting a desire to maintain stability in the region, protect Taiwan's interests, and uphold its strategic alliances. These specific game theoretic models offer different lenses through which to analyse the strategic interactions and potential outcomes within the China-Taiwan-TSMC relationship, incorporating the role and interests of the United States. By constructing and analysing these models, we can gain deeper insights into the complex dynamics at play and the strategic considerations of all involved actors. |
| Seznam odborné literatury |
| Preliminary Bibliography:
● Brunnstrom, David, and Trevor Hunnicutt. “Biden says U.S. forces would defend Taiwan in the event of a Chinese invasion.” Reuters, 19 Sept. 2022 ● Bueno de Mesquita, B. (2013). Tools for Analyzing International Affairs. In Principles of International Politics (4th ed., pp. 47-80). ● Bueno de Mesquita, Bruce. “An Introduction to Game Theory.” Principles of International Politics, 4th ed., CQ Press, 2010, pp. 51-64 ● Goldberg, Jonathan. “Samsung’s Foundry Business Is in Trouble, and That Could Have Major Consequences.” TechSpot, 6 Apr.2023 ● LaGrone, Sam. “Milley: China Wants Ability to Invade Taiwan by 2027, But Not Likely to Do So in Near Term.” USNI News, 17 June 2021. ● Lee, Chung-Shing, Kuei-Hsien Niu, and Jonathan C. Ho. “Analysis of Competitive and Cooperative Technology Strategies of Electronics Firms in the Greater China Region.” Journal of International Technology and Information Management, vol. 16, no. 1, 2007, pp. 43-64 ● Lee, Seungjoo. “U.S.-China Technology Competition and the Emergence of Techno-Economic Statecraft in East Asia: High Technology and Economic-Security Nexus.” Journal of Chinese Political Science, vol. 29, no. 1, 2024, pp. 1-26. ● Mozur, Paul, John Liu, and Raymond Zhong. “‘The Eye of the Storm’: Taiwan Is Caught in a Great Game Over Microchips.” The New York Times, 29 Sept.2021. ● Owen, Malcolm. “TSMC to build four more $10B chip fabs in Taiwan for 3-nanometer production.” AppleInsider, 14 Apr. 2023. ● Peters, Michael A. “Semiconductors, geopolitics and technological rivalry: The US CHIPS & Science Act, 2022.” Educational Philosophy and Theory, vol. 55, no. 14, 2023, pp. 1642-1646 ● Register, Eve. “ASML: Chipmaking’s Biggest Monopoly.” The Diplomat, 28 Oct. 2021. ● Smith, Zadie. Swing Time. Penguin Press, 2016 ● Snidal, D. (2004). Formal models of international politics. In D. F. Sprinz & Y. Wolinsky-Nahmias (Eds.), Models, Numbers, and Cases: Methods for Studying International Relations (pp. 227-260). University of Michigan Press. ● Snidal, Duncan. “Relative Gains and the Pattern of International Cooperation.” The American Political Science Review, vol. 85, no. 3, 1991, pp. 701-726. JSTOR. ● Snyder, Glenn H. “Prisoner’s Dilemma and Chicken Models in International Politics.” International Studies Quarterly, vol. 15, no. 1, 1971, pp. 66-103. JSTOR. |
| Předběžná náplň práce |
| Basic thesis structure (preliminary):
Introduction Background and Context ● Overview of China-Taiwan Status quo Methodology ● Game theoretic approach ● Selection and application of game models Literature review Chapter 1: Historical Context China-Taiwan relations overview Economic interdependence Introduction to game theory in historical contexts Chapter 2: Semiconductor Industry Overview Market dynamics TSMC's role and significance Application of game theory to industry dynamics Chapter 3: Game Theoretic Analysis: China-Taiwan Interactions Introduction to game theory models Analysis of Prisoner's Dilemma in our given context Application of Chicken game to strategic decisions Chapter 4: Strategic Behavior Analysis China's strategies in semiconductor industry Taiwan's responses and strategic maneuvers Extensive form games analysis of strategic behaviour Chapter 5: US and Western Involvement US policies towards China Game theory analysis of alliance formations Implications of Western strategies on China-Taiwan dynamics Chapter 6: Geopolitical Significance Future projections for semiconductor industry Application of median theorem model to assess geopolitical shifts Implications of game theoretic analysis on global stability Conclusion Summary of findings Contributions to literature Policy recommendations and future research directions References |
| Předběžná náplň práce v anglickém jazyce |
| Basic thesis structure (preliminary):
Introduction Background and Context ● Overview of China-Taiwan Status quo Methodology ● Game theoretic approach ● Selection and application of game models Literature review Chapter 1: Historical Context China-Taiwan relations overview Economic interdependence Introduction to game theory in historical contexts Chapter 2: Semiconductor Industry Overview Market dynamics TSMC's role and significance Application of game theory to industry dynamics Chapter 3: Game Theoretic Analysis: China-Taiwan Interactions Introduction to game theory models Analysis of Prisoner's Dilemma in our given context Application of Chicken game to strategic decisions Chapter 4: Strategic Behavior Analysis China's strategies in semiconductor industry Taiwan's responses and strategic maneuvers Extensive form games analysis of strategic behaviour Chapter 5: US and Western Involvement US policies towards China Game theory analysis of alliance formations Implications of Western strategies on China-Taiwan dynamics Chapter 6: Geopolitical Significance Future projections for semiconductor industry Application of median theorem model to assess geopolitical shifts Implications of game theoretic analysis on global stability Conclusion Summary of findings Contributions to literature Policy recommendations and future research directions References |