Today’s Cache | Why Taiwan’s tech diplomacy with Lithuania irking China?

Can Lithuania be a crucial tool in U.S.’s armoury to control China from attempting to use high-end chipsets for its military?

Updated - November 10, 2022 10:42 pm IST

Published - November 10, 2022 04:49 pm IST

A file photo of an employee working inside a Taiwan Semiconductor Manufacturing Company (TSMC) 12-Inch wafer fab laboratory

A file photo of an employee working inside a Taiwan Semiconductor Manufacturing Company (TSMC) 12-Inch wafer fab laboratory | Photo Credit: Reuters

(This article is part of Today’s Cache, The Hindu’s newsletter on emerging themes at the intersection of technology, innovation and policy. To get it in your inbox, subscribe here.)

Last November, Taiwan was allowed to open a representative office under its own name in Lithuania. The move caused a stir in China as it was seen as a significant diplomatic departure at time when Beijing was pursuing a one-China policy. Taipei’s move was aimed at securing its technology firms. And Washington saw Vilnius as an important ally in containing Beijing from accessing top end semiconductor.

“Taiwan is setting up an investment fund with an initial funding of $200 million to invest in Lithuanian industries which are strategic for both Lithuania and Taiwan,” Eric Huang, the head of the Taiwanese representative office in Lithuania, said about the move.

Mr. Huang noted that the fund would invest in in semiconductor, laser, biotechnology and similar Lithuanian industries.

Allowing Taiwan to open a de facto embassy in Lithuania prompted a retaliation from Beijing. China blocked exports from the Baltic EU nation. At that point, the U.S. Trade Representative Katherine Tai promised cooperation to address coercive diplomatic and economic behaviour.

A year on, this week, Taiwan announced plans to invest more in the in the EU country. Taiwan’s National Development Fund said on Monday it will invest $3.50 million in Lithuanian tech company Litilit that supplies laser technology to firms in Japan, South Korea, Taiwan and the EU.

The fund further noted that it has two more investments on the cards that will be announced later this year or by early 2023. With that update, the total Taiwanese investment in Lithuania will touch $10 million.

The increasing closeness between the Baltic EU state and Taipei is making Beijing squirm as the little republic that is known for its stance against Moscow can be an effective ally for western governments.

Lithuania’s position against Beijing took a decisive shift last May when the Baltic country said it was withdrawing from the 17+1 format. The initiative is a China-led framework for cooperation with Central and Eastern European nations.

The country also said that Huawei’s involvement in developing 5G infrastructure was a threat to its national security. It also cited cybersecurity risks from companies like Xiaomi and OnePlus.

This shift in stance for a small Baltic nation is good news for the U.S., which passed a senate resolution last year to support Lithuania’s relationship with Taiwan. 

Lithuania’s actions “combines the politics of values, anti-communism, the quest to keep Washington’s attention on the region, and the desire to grow beyond the narrow niche of Russia’s eternal critic,” per a commentary in Carnegie Endowment.

This small European nation could potentially play a crucial role in U.S.’s strategy to control China from attempting to using high-end chipsets for its military.

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