Taiwan is the world’s largest and most sophisticated manufacturer of microchips, the tiny computers that power most modern devices, from smartphones to automobiles. China consumes almost half of the world’s microchips, which makes Taiwan a critical target of the Chinese Communist Party (CCP). Beijing’s desire to reclaim Taiwan is not only driven by a desire to eradicate democracy and supplant it with communism, but also to secure the technocracy the Party relies on to maintain its tenuous grip on power in the mainland.
Martijn Rasser, a senior fellow at the Washington-based think tank Center for a New American Security, toldFox Business, “Whoever controls the design and production of these microchips, they’ll set the course for the 21st century,” adding that in the modern day, control over Taiwan-based industry leader Taiwan Semiconductor Manufacturing Company (TSMC) would be “more valuable than controlling the world’s oil.”
Writing for The Diplomat, John Lee, senior analyst at the Mercator Institute for China Studies, remarked that even if the CCP were to invade Taiwan in a bid to control TSMC, the Party is unlikely to get access to its technology due to the factors such as the company’s workforce being “increasingly being recruited abroad.”
Lee speculates that many foreign workers would also prefer to leave Taiwan over living under Communist Party rule, and any attempt to keep them by force would trigger global political ramifications that the regime will be unable to deal with. The same challenges would impose themselves if a CCP-controlled TSMC were to attempt to recruit new skilled labor from overseas.
Furthermore, a significant proportion of Taiwan’s microchip foundries are likely to be damaged in the event of an invasion, whether resulting from collateral damage in military conflict or due to intentional government or rebel sabotage. Even if an invasion were successful, there will be insurmountable roadblocks for the CCP in restarting the factories, since many of the IPs, chemicals, and machinery used in the manufacturing process are supplied by countries like the United States and its allies.
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There have been attempts to move chip production to other parts of the world to minimize such risks. However, Joerg Wuttke, President of the EU Chamber of Commerce in China, toldBloomberg a global computing shortage is bound to become more problematic as time progresses, “This is going to move on to the point where actually because of export controls, because of governmental intervention, there will be all of a sudden supply chain disruptions not just because of capacity problems…So better get prepared,”
Ripples from the chip shortage have had a major impact on several different markets, such as delays in the launch of iPhone 12, creation a supply crisis for the PlayStation 5, prevention of schools from purchasing enough laptops for struggling students who are forced to live at home due to spurious coronavirus measures, and the forcible closure of several factories in the auto industry who cannot produce vehicles without the products.
In fact, some estimate the auto industry will lose as much as $60 billion in sales during the first half of 2021 alone because of the crisis.
In an interview with 60 Minutes, Intel CEO Pat Gelsinger admitted that declining American presence in the semiconductor manufacturing industry “doesn’t sound good.” He said 25 years ago, almost 37 percent of global semiconductor manufacturing was accounted for by the United States. Today, this number has been reduced to a meager 12 percent.
