China cannot control TSMC by force - CEO Confirms
China depends on TSMC, and taking it by force is not an option
Published: 4th August 2022 | Source: @Fareed Zakaria - CNN |
TSMC confirms that their fabs would become "non-operable" if China invades Taiwan
Tensions are high in China as the United States of America's Speaker of the House Nancy Pelosi has touched down in Taiwan, a move that China sees as a threat.
For the uninitiated, Taiwan is officially called The Republic of China (ROC), which effectively became separated from the People's Republic of China (PRC) at the end of the Chinese civil war at the end of World War 2. The People's Republic of China (China) sees Taiwan as part of Chinese territory, as they see themselves as the government of all of China. This prevents Taiwan from being officially seen as an independent nation, despite the fact that Taiwan has its own currency, passports, armed forces, government, and constitution. Even after decades of effective independence, China wants control over Taiwan, even if the Taiwanese don't want it.
Globally, Taiwan is one of the most important global regions when it comes to semiconductors. TSMC, the Taiwan Semiconductor Manufacturing Company, is the world's leading semiconductor manufacturer, building cutting-edge chips for Apple, AMD, Nvidia, Intel, and others. TSMC is Taiwan's crown jewel, and the loss of TSMC would be hugely damaging to the world's semiconductor market. Simply put, a war in Taiwan would bring the world's semiconductor market to its knees.
Mark Liu, the Chairman of TSMC, has recently spoke to CNN's Fareed Zakaria to discuss the tensions between China, Taiwan, and the USA. Liu stated that "Nobody could control TSMC by force" when discussing a potential Chinese invasion of Taiwan, saying plainly that TSMC's factors would be "not operable" if Taiwan was invaded.
While TSMC's technology world-leading, it requires access to global supply chains and connections to Japan, Europe, and the United States. A Chinese invasion would sever these connections, preventing TSMC from operating. Beyond that, a war could irreparably damage TSMC's facilities, changing TSMC from Taiwan's crown jewel to something that's effectively useless to China.
When speaking to CNN, Mark Liu also stated that China accounts to 10% of TSMC's business, which means that China relies on Taiwanese silicon. TSMC only works to Chinese consumer manufacturing (not military manufacturing), and TSMC knows that an invasion would sever this link and hurt the Chinese economy. China reportedly buys 90% of its silicon from other countries, and that fact alone makes an invasion of Taiwan a potential killing blow for China's technology sector.
As it stands, China cannot invade Taiwan on a whim. Taiwan is protected by "Silicon Shield", and an invasion of Taiwan would not allow China to simply bypass this problem by taking TSMC. TSMC's facilities would likely be damaged or destroyed during a Chinese invasion, and the importance of TSMC alone makes such an invasion a global issue that cannot be ignored.