Yet TSMC, and Taiwan, have been increasingly aligned with American policy. The company’s cooperation was indispensable to the Trump administration’s efforts to hobble Huawei, the Chinese tech giant. TSMC was a major supplier for Huawei until new U.S. rules put an end to that.
TSMC will also receive American chip subsidies linked to pledges not to further expand in China under the recently passed CHIPS and Science Act of 2022. Taiwanese officials have been receptive to a new U.S.-proposed Chip 4 alliance, which seeks to unite the American chip supply chains with those of Taiwan, South Korea and Japan — at the exclusion of China.
Analysts debate how much protection China’s reliance on Taiwan gives it. Some argue that calculations over supply chains are insignificant in a decision over war, which could bring untold devastation and reshape geopolitics.
“You have to worry that those interdependencies look very significant, in peacetime, to the people who are embedded in those relationships,” said Richard J. Danzig, who served as Navy secretary under President Bill Clinton. “But when the momentum for war begins to develop, it tends to swamp those things.”
Nonetheless, few deny that Taiwan’s centrality in the supply chain makes such considerations a factor, a concept generally referred to as the “silicon shield.” An invasion of Taiwan would mean a form of mutually assured destruction, not necessarily of the world, but for the many modern gadgets we use every day.
That does confer a dose of security, said Jason Hsu, a former Taiwan legislator and current fellow at the Harvard Kennedy School focused on technology.