The chip foundries are just one factor in the importance of Taiwan. What matters more is that control over Taiwan would vastly simplifies to exercise control over what China perceives as their territorial waters (not just as their Exclusive Economic Zone!). The economic impact can be tanked by a national economy and is easily justified in the name of furthering national security, as it would severity weaken US influence in the whole region.
Control of South China sea is far too important for china to ignore Taiwan, also Taiwan's dominance in chip design/manufacturing would give china enormous influence over the world.
Taiwan also serves the role as an unsinkable battleship right next door to Chinas mainland. Its military value extends far beyond its chip production capabilities in order for the US to check Chinas influence in SEA region.
Control over Taiwan means far more than just semiconductors.
US naval strategy is based on Taiwan. With Taiwan in the fold, China's trade can be effectively blockaded should the situation deteriorate to war. It's a last ditch measure, for sure, but a valuable card to hold nonetheless. China is building more pipeline and rail to de-risk this, but ultimately they want full access to the Pacific. Taiwan and South China Sea militarization give them this.
Taiwan going to China turns the tides of Western influence in Asia. Many nations friendly to the West would "switch sides", including close Western allies like Japan and South Korea. This would have tremendous impact to the West's economy, jobs, cost of goods, cost of energy, etc.
Taiwan is perhaps one of the most important subjects that will define this century. There's a reason all eyes are on it.
My initial thoughts on this came the from the opposite side in terms of Taiwans security.
One of the major bounties for invading Taiwan would be in the acquisition and control of their chip manufacturing. Which - as you mention, the entire tech world is dependant on.
By moving some of that capability offshore, that incentive is gone.
Might scare Taiwan and embolden China? A huge reason we hold Taiwan as an ally is their chip production capabilities. If we become self reliant on those then we don't really need Taiwan and China might try to invade them, which would be bad for our own national security interests.
I thought the same thing. I believe it is more nuanced than that.
PRC wants Taiwan regardless of its production value (geopolitical & PRC narrative) though I'm sure they would like the control of chip manufacturing. However if the US did move all of its strategic production off island there would be less value accrued to defending outside that said keeping a close presence on China expansion is important to the US. So it would still have value maybe a bit less so.
Please excuse the human aspect of the population as we are separating that part of the discussion.
Taiwan importance is its geography. If China is able to control Taiwan it would not have any restriction for its shipping lanes and military. Its a much more important asset in the long run compared to HK.
America has no choice but to defend Taiwan with the full weight of their resources, because losing Taiwan means they've lost access to the most important resource in the world. Chips are more important than anything. America has nothing without them.
I'm somewhat concerned for Taiwan though... At least having a headstart on chip production gives them some cover from those who would be more likely to step in as China makes strides towards potential invasion. Could make HK look like a beach party.
While semiconductors are a very important part of industry, it's naive to think that a loss of Taiwanese output would be as disastrous as this article suggests.
Consider the effects of the coronavirus pandemic, they are much larger than any such loss would have, yet this pandemic didn't have any acute large-scale effect on geopolitics (though it will like have a longer-term, and some what unpredictable effect).
A much larger long-term effect of China's ambitions towards Taiwan would likely be seen in China's growing economic might resulting in a shifting of alliances/allegiances of East Asian countries between the US and China.
This does not bode well for Taiwanese national security. I’m surprised Taiwan allowed it. Considering that dependence on Taiwan for chip production has got to be one important reason why the US would defend Taiwan in case of an attack by China.
Taiwan's output of chips requires inputs from the rest of the world including Japan. At this time it doesn't make sense for china to cut out it's main source of high tech chips. It could make sense later if China had its own supply of chips and could cut out Taiwan altogether. China is pushing hard to make their own non-liberal order but China also depends on exports. Also China's political system is based upon absolute control over everything a person does. It will be messy implementing that onto people who already fought against it so there will be a lot of killings, disappearing people, and the usual China stuff broadcast all of time. Will be a bad look, not great to throw that in the face of people you need to export goods to.
We have no political control in Cuba even though we did take a portion of the island.
Taiwan is also stategically important because it guards access from the Pacific to China and back. To the north there is Japan and South Korea (US allies), and to the south there are Vietnam and the Philippines, who already feel the pressure of the expansion of China's influence (Chinese military bases in the South China sea), and are thus likely to side with the US in the future. Right now, China is sorta contained, but if the CCP can reassert itself on Taiwan, the situation will flip and the CCP will have full control about access to the mainland from the sea, and can freely access the Pacific.
Losing Taiwan fabs would have only minimal military impact. Military hardware uses older computing tech, built on larger nodes (its development takes many years / decades). It's also relatively low volume and military can outbid almost any other customer.
I believe the importance of Taiwanese fabs is very overstated. Taiwan is mainly a (geo) political matter.
Taiwan's chip fabs are not the only reason that Taiwan is strategically key to any country that is not CCP. Enormous amounts of shipping, especially to/from Japan sail through those straits, and ceding control to CCP is not a viable strategic option.
Even if TMSC and other fabs are entirely moved off Taiwan, or reduced to Bhakmut-style smoking rubble, CCP will still have a serious fight on it's hands to gain control of Taiwan.
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