The Taiwan Semiconductor Manufacturing Company, also known as Taiwan's "Silicon Shield," does not fully guarantee preventing war for Taiwan, says DIGITIMES Research analyst Eric Chen.
In the realm of global geopolitics and technological advancement, the triangular relationship between China, Taiwan, and the United States holds significant implications, particularly in the semiconductor industry. Recent wargame simulations and developments have provided insight into the intricate dynamics at play, raising questions about security, competition, and the future of the countries and the industry.
The most recent and declassified wargame conducted by the Center for Strategic & International Studies (CSIS) showed that Taiwan, together with the US and Japan, jointly defeated a conventional amphibious invasion by China, but at great costs. However, a more recent tabletop exercise (TTX) done by various Taiwan-based think tanks looked to mitigate the risks derived from armed conflict.
The TTX revealed that a blockade of Taiwan could result in a shortage of materials for semiconductors and its effect on fab operations, difficulty of exporting chips, and damaged or destroyed fabs. With Taiwan's dominant semiconductor prowess, disruption due to armed conflict could devastate the world by setting technology back 20 years, says Eric Chen.
Taiwan's semiconductor industry stands as a crucial global player, "Taiwan's semiconductor industry is crucial globally, not just for the US," says Chen. The significance of Taiwan's semiconductor prowess transcends mere industrial development; it has become a matter of national security for multiple nations, especially amid escalating geopolitical tensions.
The prospect of providing protection to Taiwan to safeguard its semiconductor industry and prevent potential conflicts is certainly possible. "Some level of intervention or mediation seems likely since this issue is globally significant." While some may view such protection as a viable solution to deter aggression, the reality remains uncertain.
As nations increasingly view semiconductor capabilities as vital for national security, the landscape of international relations undergoes a transformation. The competition extends beyond traditional trade disputes, with a focus on controlling critical technologies and supply chains. The approaches of different governments vary, with each prioritizing its interests and strategies.
Chen states that Japan's substantial support for semiconductor development contrasts with the US's emphasis on indigenous capabilities, highlighting divergent approaches to achieve technological supremacy. "Japan's attitude is crucial since it's willing to provide more than half of the investment required, influencing future supplies. On the other hand, the US focuses more on its indigenous ecosystem, prioritizing its own interests," says Chen. However, the interconnected nature of the semiconductor industry means that resolving conflicts requires international cooperation and strategic alliances.
The relocation of semiconductor manufacturing to countries such as the US or Japan presents logistical challenges and uncertainties. While various countries have made efforts to bolster domestic capabilities, Chen says that matching Taiwan's semiconductor ecosystem remains a formidable task that could take years to accomplish. Moreover, the ability to operate independently during a crisis is questionable, raising concerns about supply chain disruptions in the event of conflicts.
The imposition of sanctions and trade restrictions highlights the delicate balance of power in the semiconductor industry. The US government's stance on controlling technology exchange with China underscores its strategic objectives and concerns regarding national security.
Chen noted that US Commerce Secretary Gina Raimondo's statement is an acknowledgment of China's technological advancement, despite it being years behind what the US has developed. "The statement implies that there is a gap that is believed to be under control, and the sanctions are effective," says Chen. With both countries looking to advance in semiconductor technology, Chen says it is possible for the US and China to have advanced processes (2nm or below for the US) and technologies (EUV for China) developed by 2030.
While tensions between the US and China may escalate, the prospect of a full-scale conflict remains improbable, given the high stakes involved. The concept of a "Silicon Shield" to protect semiconductor production may offer some reassurance, but its effectiveness and feasibility are subject to debate.
About the Analyst
Eric Chen is an Analyst and Project Manager at DIGITIMES Research. Chen received his Master's degree in International Business from Taiwan's Soochow University. His research focuses on the foundry industry as well as the IC assembly & packaging industry.
Credit: DIGITIMES
