The advanced chips Taiwan makes are an indispensable part of everything from smartphones to washing machines.
If a conflict were to occur across the Taiwan Strait, “it would be disastrous not only for Taiwan, not only for China, but also for the US, the European Union and everyone else,” said Roy Lee, deputy CEO of Chung- hua Economic Research Institute.
The chaos in global car manufacturing caused by a pandemic-related chip shortage over the past year gives an idea of how bad it could get.
“With the car shortage, now you have to wait six months for cars made in Europe,” he added. “If Taiwan stopped supplying chips for other products, I would probably have to wait more than 12 months for a new mobile phone, or even longer for a laptop.”
Taiwan’s ‘holy mountain’
One Taiwanese company in particular, Taiwan Semiconductor Manufacturing Company (TSMC), is the world’s largest contract chipmaker and plays a key role in supplying products designed by tech companies like Apple, Qualcomm and Nvidia.
The company did not respond to a CNN Business request for comment.
Super-advanced semiconductor chips, such as those produced by TSMC, are difficult to manufacture due to the high cost of development and the level of knowledge required, which means that much of the production is concentrated in just a handful of suppliers.
If Taiwan were to fall to the communist authorities in Beijing, Western nations could lose access to the island’s valuable semiconductor chips.
In recent months, China has increased its military pressure on Taiwan, including sending a record number of fighter jets near Taiwan last October. Chinese President Xi Jinping has refused to rule out the use of force to achieve what he called “national reunification.”
But as comparisons are made between kyiv and Taipei, the Taiwanese government has repeatedly emphasized the strategic role of its semiconductor industry.
“Taiwan and Ukraine are fundamentally different in geopolitics, geography and in the importance of international supply chains,” President Tsai Ing-wen said in condemning Russia’s invasion of Ukraine last month.
Asked about the differences between Taiwan and Ukraine, J. Michael Cole, a senior fellow at the Taipei-based Global Taiwan Institute, said the island’s indispensable role in global supply chains “changes the way we countries, the international community, will calculate its response to the threat or invasion against Taiwan.”
China’s Taiwan Affairs Office did not respond to a request for comment.
While Taiwan’s role as a leading semiconductor hub may be indispensable to the world right now, experts believe there are challenges for the island to maintain its edge.
The global chip supply shortage has already prompted many countries to take steps to end their dependence on Taiwan.
“Right now, China, the United States and the European Union are looking at so-called next-generation semiconductor technologies,” Lee said.
“We understand that challenges lie ahead and we must maintain our leadership in semiconductors through research and development and, more importantly, cultivate qualified talents that will support Taiwan’s success,” he added.
As discussions about Taiwan’s future grow, Lee believes the best way to keep the island safe is by leveraging a combination of military and economic might.
“That strength comes not only from military strength, but also from economic strength.”
— Will Ripley and Wayne Chang contributed reporting from Taipei, Taiwan.