When U.S. House Speaker Nancy Pelosi visited Taiwan on August 2, her action drew the ire of the Chinese government, who responded with a series of military drills focused on six zones that essentially encircled the self-ruled island.
The drill, carried out by the People’s Liberation Army (PLA) — the principal military force of the People’s Republic of China and the armed wing of the Chinese Communist Party (CCP) — raised fears of a potential invasion all over the world.
While the United States has not officially recognized Taiwan as an independent nation, it has maintained close ties with the island, providing weapons for Taiwan to defend itself. China, on the other hand, has always viewed Taiwan as part of its territory and has plans to bring the island under its rule by any means necessary, including war.
The U.S. and China have shown great interest in Taiwan, and Taiwan’s semiconductor production is central to this interest. The island accounts for over 90% of global production for process nodes below 10 nanometers — the semiconductors used in some of the world’s most advanced military and civilian technology, such as machines and smartphones.
Taiwan’s prominent role in the manufacturing of chips has made it indispensable to the U.S. and China. As a matter of fact, both superpowers have found themselves super dependent on Taiwan for semiconductors, and that would make a Chinese invasion of the small island a gross miscalculation.
Taiwan Economy Minister, Wang Mei-Hua, told Reuters in an interview that the nation’s semiconductor industry, led by Taiwan Semiconductor Manufacturing Company Ltd (TSMC), is deeply intertwined with the island’s future.
“This isn’t just about our economic safety,” she said. “It appears to be connected to our national security, too.”
As Liam Gibson, a Taipei-based geopolitical analyst and the International Public Relations Director at Taiwan-based Asia-Pacific Youth Association puts it, “Taiwan Chips are its ‘silicon shield’ against Chinese aggression.”
Should China invade Taiwan, the result could be catastrophic not only for Taiwan but for China too. Simply put, Taiwan’s semiconductors pose the greatest deterrence to any potential Chinese invasion.
Along with the deterrence posed to a Chinese invasion, Taiwan’s semiconductors also ensure American support since the U.S. relies on its chips.
To better understand how Taiwan’s semiconductors could deter a Chinese invasion, one must know just how vital the chips are to China and its ambitions for global dominance.
Importance of Taiwan’s Semiconductors to China
Despite China’s push to become self-sufficient in its production of chips, the nation is still a long way behind Taiwan in that regard. Hence, China is largely dependent on Taiwan for its chips. China is also the world’s leading importer of semiconductors. In 2020, China imported $350 billion worth of semiconductors, making the chips its largest import for that year. While China’s semiconductor imports dropped by 9.6% in April 2022, compared to the same period in 2021, it remained the world’s largest importer of semiconductors.
China used the semiconductors to manufacture smartphones, electric vehicles, and other consumer electronics, which are then exported to other parts of the world. The semiconductors are also needed to produce military hardware for China’s rapidly expanding PLA.
Semiconductors are central to China’s quest for technological, economic and military dominance. To achieve its global ambition, it must rely on Taiwan’s semiconductors for the foreseeable future.
“China has a huge interest in gaining access to Taiwan’s chipmaking know-how because it would perfectly match China’s own vast deposits of rare earth minerals,” Alexander Görlach, a China expert at Oxford University, told private German TV station Welt recently.
What Invading Taiwan Would Mean for China and the World
Should China invade Taiwan, the result would be felt all over the world, especially in the semiconductor market. The invasion would disrupt the global supply chain or even bring semiconductor production to a complete halt.
TSMC Chairman Mark Liu told CNN in an interview that if China were to invade Taiwan, TSMC could be rendered “not operable.”
“Nobody can control TSMC by force. If you take a military force or invasion, you will render TSMC factory not operable,” Liu said. “Because this is such a sophisticated manufacturing facility, it depends on real-time connection with the outside world, with Europe, with Japan, with the U.S., from materials to chemicals to spare parts to engineering software and diagnosis.”
Should China successfully invade Taiwan and somehow keep TSMC intact, it would need Taiwanese experts to run the factory. Common sense dictates that citizens of a conquered nation would not be easily swayed into helping their conquerors. While it is easier for China to subject Uyghur Muslims to forced labor, it would find it difficult to force the Taiwanese semiconductor experts to do its bidding.
The global semiconductor shortage that would follow a Chinese invasion would be devastating to the world. To put it simply, an inoperable TSMC could bring about a technological drought for the world.
Semiconductor Shortage Could be Detrimental to China’s Global Ambitions
The importance of semiconductors to China’s global ambition of becoming the most powerful nation in the world can not be overemphasized. Unless China finds a way to manufacture its own semiconductors, any shortage caused by its potential invasion of Taiwan could prove devastating for its desire for global dominance.
Some of the effects of a semiconductor shortage on China’s global ambition include:
- China’s military would find it difficult to replace its weapons and other military hardware.
- A global semiconductor shortage would put out the fires of Xi’s ambition of seeing China’s hi-tech industry double its gross domestic product by 2035.
- A global semiconductor shortage would bring China’s fourth industrial revolution to a premature end.
To put it mildly, semiconductors are the driving force of China’s global ambition, and Chinese leaders are not oblivious of this fact. China has placed many economic sanctions on Taiwan, even after Pelosi’s visit. Not once has China extended its sanctions to include Taiwan’s semiconductors, proving that the chips are pivotal to China and could deter it from invading Taiwan.