Taiwan · China · Donald Trump · TSMC · Rest of World
Taiwan’s chips power the global economy. China holds the leverage
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In recent years, there have been several reminders of how interconnected the global economy is, and how fragile supply chains are.
Key facts
- TSMC produces roughly 90% of the world’s most advanced semiconductors and 99% of the chips used to train frontier AI models
- These hiccups are nothing compared to the effects of a serious disruption to the flow of chips from Taiwan, according to Eyck Freymann, a Hoover fellow at Stanford University, and author of a new
- If Beijing controlled it, the Chinese Navy would have unimpeded access to the open Pacific
- The 2020 pandemic chip shortages, empty car lots, delayed appliances, would look minor by comparison
Summary
These hiccups are nothing compared to the effects of a serious disruption to the flow of chips from Taiwan, according to Eyck Freymann, a Hoover fellow at Stanford University, and author of a new book, Defending Taiwan: A Strategy to Prevent War With China. “The economic shock from a serious Taiwan disruption would dwarf anything we’ve seen in the postwar period,” Freymann told Rest of World ahead of President Donald Trump’s planned visit to China. Taiwan matters for three overlapping reasons. The second is political. Xi Jinping has tied his legacy to “national rejuvenation,” and in his telling, that includes resolving the Taiwan question on Beijing’s terms.