Semiconductor Equipment

Will Taiwan decimate TSMC if China invades?

11 January 2022

In a new paper published by the U.S. Army War College, military planners have proposed a Taiwan deterrence strategy against a possible invasion from China.

The strategy proposed would render the island “unwantable” so that it would make no logical sense for China to seize it by force. The strategy also includes a key recommendation for Taiwan to threaten to destroy Taiwan Semiconductor Manufacturing Co.’s (TSMC) fabs.

TSMC is the largest foundry in the world and the third overall chipmaker by sales. The impact of such an action would cripple the supply chain globally and leave Samsung, GlobalFoundries and Intel as some of the few alternatives.

"China's high-tech industries would be immobilized at precisely the same time the nation was embroiled in a massive war effort," said the War College authors. “Even when the formal war ended, the economic costs would persist for years.”

The paper, entitled “Broken Nest: Deterring China from Invading Taiwan,” said the approach stems from an acknowledgement that traditional deterrent strategies might not be strong enough to discourage China from taking action such as deploying American warships in the Taiwanese region.

This scorched Earth approach would ensure key chip producing fabs would not fall into China’s hands, but the paper also evaluates evacuating skilled Taiwanese workers out of the sector and giving them refuge.

The move may be unappealing to the Taiwanese, but the costs would be “far less devastating to the people of Taiwan than the U.S. threat of great power war, which would see massive and prolonged fighting in, above and beside Taiwan,” the paper said.

"If the U.S. and Taiwan wish to deter China from invading, then they should look for means of doing so that do not rely on the threat of U.S. military reprisals,” Peter Harris, an associate professor of political science at Colorado State University and an author of the paper told Nikkei Asia. “Relying exclusively on military threats is becoming less credible and thus more dangerous."

Nikkei Asia reported that China responded to the paper stating the country’s pursuit of cross-strait reunification is not for TSMC.

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