Taiwan is the dominant producer of advanced computer chips in the entire world. One could ask "why?" One could also reframe the question and ask, "why aren't advanced computer chips manufactured in California or Michigan or Ohio or Massachusetts?
There is a lot of concern that rare earth metals are predominantly sourced from China. If there was ever a war with China, that could be a problem, because a lot of advanced military equipment relies upon them. There has been a fair amount written about this issue. Despite the name, unlike diamonds and platinum group metals which have deposits only a few places on Earth, for example, rare earth metals aren't actually particularly rare. There are many places on Earth with abundant rare earth metal deposits and there was a time when they were mined in the U.S. and many other places.
China is dominant in rare earth metal production because it is the low cost producer of a resource that there wasn't all that much demand for until recently. And, while it is the low cost producer, it isn't all that dramatically cheaper. The difference between the production costs for oil in low cost production areas like Saudi Arabia and high cost production areas like off shore drilling in the Arctic and fracking in the U.S. is greater than the differences in the cost of exploiting rare earth metals in China compared to doing so in the U.S. before the industry more or less withered away here.
There is no intrinsic reason that the dominant diamond cutting center in the world is a single city in India, or that it movie industry is concentrated in "Bollywood".
There is no intrinsic reason that the financial industry in the U.S. is highly centralized around centers in New York and San Francisco, that the commodities trading industry in the U.S. continues to be highly centralized in Chicago, that a huge share of American actuaries work in Connecticut, that Delaware is the dominant player in the corporate law of big businesses, that the book publishing industry is centered in New York City, the U.S. movie production is concentrated in Los Angeles, that U.S. TV and music production is split between Los Angeles and New York City (except for country music which is centered in Nashville and Memphis in Tennessee), and that new musicals and stage plays in the U.S. are highly concentrated in New York City, that the U.S. robotics industry is centered in Boston, ands the the U.S. tech industry has its headquarters in San Jose. Vancouver, Toronto, and Prague have no intrinsic advantage that make them secondary centers for filming movies and mini-series.
Indeed, intrinsic availability of natural resources or intrinsic geographic advantages is something of a curse to economic development. West Virginia's abundant coal resources (like other centers of coal mining in Europe) did not make it rich. The unique in the world supplies of diamonds and platinum group metals in a small area of South Africa weren't all that important in its relative prosperity on the African continent. Yemen's optimal farming conditions haven't made it prosperous. Western Pennsylvania's oil reserves didn't bring that region lasting prosperity. The unique in the world supplies of ultra-pure quartz in Western North Carolina didn't make that region particularly affluent. Bolivia isn't particularly prosperous despite having some of the richest supplies of lithium in the world. Panama's unique location and its canal have not made the country an economic standout with respect to its Latin American neighbors. Venezuela's rich supplies of oil haven't prevented it from being an economic basket case. Afghanistan's abundant poppy fields didn't stop it from being the poorest country in Eurasia. In India, the standard of living of a place is basically inversely related to its geographically determined agricultural productivity.
Economic prosperity does show sharp breaks at national and subnational borders. But it is even more tightly tied to particular, reasonably compact, urban centers, and sometimes even to particular neighborhoods within major urban centers. The boroughs of Queens and Staten island aren't the source of New York City's dominance in finance, entertainment, or publishing. When professionals and craftsmen with similar sets of skill are located close to each other there are synergies that benefit these entire economic communities and allow them to achieve excellence. Knowledge based economies have returns to scale.
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