Taiwanese Semiconductors: Deterrence in the 21st Century

By: Edwin Tang

Infringing on Taiwanese sovereignty, Chinese ships, planes, and drones continue to enter Taiwanese airspace and waters in a bid to intimidate Taiwan into submission. In response, Taiwan has shored up defenses in desperation to deter an amphibious assault by China’s growing military. Their best bet is that the United States continues to support Taiwanese sovereignty even as President Trump’s administration returns America to a more isolationist approach on the world stage, but more covertly is the “Silicon Shield,” a Taiwanese dominance in semiconductor manufacturing unmatched by any country in the world. At least for now.

Producing 90% of the world’s cutting-edge and most technologically sophisticated chips through extreme ultraviolet lithography (EUV), Taiwan’s TSMC is the backbone of the global economy with firms reliant on chips using Taiwanese exports for necessary computing power. Even China has no chance to catch up even remotely soon, with estimates putting Chinese semiconductor manufacturing at ten years behind TSMC’s 2-nanometer chip capabilities.

With a reliance on Taiwanese chips on powering its economy and technological capabilities, China’s interdependence with Taiwan seemingly deters it from full-on escalation into invasion. The risk that access to the supply of semiconductors from Taiwan is jeopardized could result in stagnant economic growth, antithetical to the agenda of the Chinese Communist Party (CCP).

In the event of an invasion, Taiwan could self-sabotage their semiconductor manufacturing processes through a “kill switch,” cutting off Chinese access to advanced chips and preventing technology theft from Chinese agents if a successful invasion occurs. The threat of this could be enough to secure Taiwan against Chinese aggression. 

Additionally, an interdependent United States with economic interests in the semiconductor supply chain could be motivated to defend Taiwan against China in the occurrence of a Chinese invasion, further deterring potential conflict. 

However, concerns remain as to the sustainability and effectiveness of the “Silicon Shield.” Both the United States and China seek to diversify their supply chains from a potential future warzone, investing heavily in semiconductor and chip manufacturing. While the United States has drastically increased its subsidies of the industry through the CHIPS and Science Act, signed under former President Biden, China has invested tens of billions of dollars in the development of an independent domestic supply, seeking to evade interdependence on the global economy amidst increasing U.S-China tensions. Further complicating the matter are export restrictions by the U.S. on advanced chips with 7-nanometers or less, resulting in continued disruption of the “Silicon Shield” at the potential cost to Taiwanese sovereignty and future self-determination.

Moreover, President Trump’s recent proposal to implement a 100 percent tariff on Taiwanese semiconductors could alienate US-Taiwan relations, reducing the likelihood the United States comes to Taiwan’s defense if China chooses to escalate. 

With decreasing effectiveness, Taiwan may soon find the necessity of a different defense strategy, one that may be difficult to deter an increasingly aggressive and strong China. As Xi directs his military to prepare for invasion, motivated by the quest for Chinese hegemony, the future of Taiwan remains unclear.