US Safeguards Taiwan's Semiconductor Industry Amid Geopolitical Strains

Semiconductors play a crucial role in numerous electronic devices like computers, smartphones, and medical equipment. They are also vital for national defense applications such as satellites, missiles, and radar systems. A small group of countries dominate the global semiconductor industry, with Taiwan being the largest producer of advanced chips.

The United States heavily relies on Taiwan for its semiconductor supply, especially for cutting-edge chips used in military and intelligence operations. The world's largest contract chipmaker, Taiwan Semiconductor Manufacturing Company (TSMC), is a key supplier for many prominent US companies like Apple, Qualcomm, and Nvidia.

However, Taiwan's semiconductor industry faces various challenges and risks that could jeopardize its stability and security. One significant concern is the geopolitical tension between Taiwan and China. China considers Taiwan a renegade province and has not ruled out the use of force to reunify the island with the mainland. China has also been investing heavily in its own semiconductor industry to reduce dependence on foreign suppliers and challenge US technological leadership.

Semiconductor Industry and Politics

Recently, Representative Seth Moulton, a Democrat from Massachusetts and a member of the House Armed Services Committee, expressed his views on the possibility of China invading Taiwan in an interview with CNN. He emphasized the importance of the United States being prepared to defend Taiwan, which he described as "a stronghold of democracy in the region and a critical partner for American interests." He even quipped that if China invades Taiwan, "We're going to blow up TSMC."

Moulton highlighted that China's aggression towards Taiwan poses a threat to the international order and the values the US upholds, such as freedom, human rights, and the rule of law. He urged the Biden administration to clearly demonstrate its commitment to Taiwan's security.

Beforehand, the US has adopted a policy to safeguard its semiconductor business in Taiwan and diversify its chip supply sources. The CHIPS for America Act, passed in 2020, aims to enhance domestic chip production and research. Additionally, the US signed a deal with TSMC to construct a $12 billion factory in Arizona, expected to be operational by 2024. This factory will be built by TSMC, a critical supplier to the US military and intelligence agencies.

WTO and Semiconductors

The US has also supported Taiwan's involvement in international organizations and forums related to semiconductors, such as the World Trade Organization (WTO) and the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies.

However, it's important to note that the US follows the One China policy, recognizing the People's Republic of China (PRC) as the sole legitimate government of China and considering Taiwan as part of China. This policy does not recognize Taiwan's independence from China.

Nevertheless, the US is concerned that a potential Chinese invasion or coercion of Taiwan could disrupt or compromise this strategic industry, impacting national security and economic competitiveness. Hence, the US aims to strengthen its ties with Taiwan, providing defensive weapons and diplomatic support, while treading carefully to avoid provoking China excessively.

For example, the US approved a $1.8 billion arms sale to Taiwan in 2020 and sent high-ranking officials to visit the island.

House Speaker Nancy Pelosi's visit to Taiwan in August 2022 was seen as a response to the growing public sentiment regarding China as a threat. US Secretary of State Antony Blinken's visit to China in June 2023 focused on addressing escalating tensions over Taiwan, seeking cooperation on climate change and global health, and promoting human rights and democracy in the region.

The discussions between Blinken and his Chinese counterpart, Wang Yi, were cordial yet frank, acknowledging their differences and expressing concerns. Blinken reiterated the US commitment to the One-China policy while urging China to refrain from any unilateral actions that would destabilize the status quo across the Taiwan Strait.

The global semiconductor industry, with Taiwan at the forefront, faces risks due to geopolitical tensions. The US recognizes Taiwan's significance and is taking measures to secure its semiconductor business, diversify chip supply sources, and support Taiwan's involvement in international organizations. Striking a delicate balance between safeguarding security and stability while avoiding escalation is crucial in navigating this complex landscape.