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TSMC setting the stage for a Chinese invasion?

TSMC are the foundry responsible for fabricating many of the world's leading semiconductor devices.

Their industry-leading 4nm architecture capabilities have made it possible to fit tens of billions of transistors on a single chip, thus allowing the creation of modern CPUs, GPUs and NPUs by the likes of AMD and NVIDIA.

To date, TSMC's operations have been largely based in Taiwan and are seen as one of that country's most important industries.

The US government presently seems intent on fixing that.

With financial aid from the US government, TSMC is in the process of building fab plants in the USA. The question that Taiwan needs to be asking is whether this is a good thing or a bad thing.

In a world where military tensions are at an all-time high between China and Taiwan, perhaps the biggest card Taiwan has is the USA's dependence on TSMC's foundries.

If China were to take military action against Taiwan it is almost certain that the USA would become involved and it is this guaranteed involvement that may be the only thing causing China to hesitate at this point.

Once TSMC has set up factories on US soil, as it is about to do, there would be far less incentive for the USA to become militarily involved in Taiwan's defence, should it come under attack.

So, while TSMC's decision may be good for the company, it is perhaps a very risky move for Taiwan as a nation.

In recent days we've seen that US president Donald Trump has little appetite for involvement in wars between other nations.

Although there was once a mutual defense treaty in place between Taiwan and the USA, this is now long lapsed and the current agreement, in the form of The Taiwan Relations Act requires only that the USA

In theory, this would require no direct military engagement on the part of the USA, simply the supply of weapons and training as has happened in the case of the Ukraine conflict.

The actual reality is that if China were to attempt an invasion of Taiwan right now, the US would likely intervene with far more "vigor" so that they didn't lose access to TSMC's production facilities.

However, once the equivalent fab facilities are built on US soil I suspect that the USA would completely reject any proposals to put boots on the ground in the case of an invasion and we'd end up with Taiwan rapidly being over-run by Sino forces.

From a strategic defense perspective, Taiwan's leaders should (IMHO) be very worried that they are effectively going to lose the one asset that protects them from a Chinese invasion. China will likely be watching gleefully as any chance of meaningful US involvement in the island's defence is lost through TSMC's move.

It has been speculated that TSMC's fabs in Taiwan have a "kill switch" that can be thrown to completely disable those facilities in the event that they fall into Chinese hands. That may significantly reduce the value of the island to China but it won't stop an invasion because it appears that ideology is more important than the spoils of victory to the Chinese ruling party.

Damn, the last thing we need is another war, no matter how brief it turns out to be.

Carpe Diem folks!

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