Complete Overseas Chip Reliance Dangers

Ever since the tech revolution occurred, Taiwan has become, and remained, the semiconductor chip capital of the world. Virtually everything today that plugs into the wall, or runs on a battery, has Taiwanese chips built-in. The fact that most chips are built 9,000 miles away is not a good thing. It becomes a national security issue, especially when it comes to military, healthcare equipment, and communications.

According to the US Commerce Secretary, Howard Lutnick, the Trump administration is pressuring Taiwan to rapidly move 50 percent of its chip production into the US if it wants ensured protection against a threatened Chinese invasion. Fifty percent is a lofty goal, hence, I don’t see that happening anytime soon. Even the experts recognize this won’t be possible in a single administration. Nvidia CEO, Jensen Huang, puts the time frame somewhere between one and two decades.

Taiwan currently makes about 95 percent of chips used in smartphones and cars, as well as in critical military defense technology. Were the US to lose access to Taiwan's supply chain, due to a Chinese attack, or an unforeseen occurrence, the US risks defense capabilities while also taking an economic hit.

Another consideration is whether Taiwan would be willing to move a sizable amount of its production to the United States. They have made some promises, such as TSMC committing $100 billion for plants in the US, but nowhere close to the 50% Trump wants. Also, will Taiwan be willing to sacrifice domestic jobs to their American counterparts, whom they see as not having a workforce technologically smart enough?

Then there’s the protection factor for Taiwan. Numerous countries depend on and purchase Taiwan-made semiconductors in exchange for providing “protection” in case China pushes invasion rhetoric. If the US and other countries start mass producing their own semiconductors, such assumed protection could disappear and leave Taiwan abandoned to a Chinese power grab.

To close the deal with Taiwan, Lutnick suggested that the US would have to offer "some kind of security guarantee". Taiwan should reasonably expect that the moving of some of their supply chain to the US won't harm their own safety. Additionally, Taiwan will also want to be assured that the US will remain "fundamentally reliant" upon Taiwan chips.

He also claimed that if the US acquired a 50 percent market share, it would ensure that “we have the semiconductors we need for American consumption." I think that we can all recall the semiconductor supply chain issues during and after Covid. Virtually everything that required chips were in a state of shortage due to ill-advised worldwide job shutdowns.

For those few who followed my brief political hopes, they know I’m a huge supporter of producing as many of our own semiconductors as possible. I believe every country should do the same due to the aforementioned issues of national and economic security. Please note my wording, though: “producing as many of our own”, not “importing Taiwanese jobs.” It’s in our interest for American companies to be more self-reliant.

Source used: Arstechnica.com