At a time of heightened chip nationalism, the semiconductor supply chain is the lifeline of the competition between the United States and China. It’s not just a technological race; it’s a battle for strategic dominance.
At the center of this competition is Taiwan, which plays a crucial role in producing the world’s most advanced chips. Taiwan Semiconductor Manufacturing Company (TSMC) is a key player, with its chips powering everything from smartphones to artificial intelligence (AI) servers and military systems.
Does Taiwan’s leading position in the semiconductor industry, often referred to as the “Silicon Shield,” actually protect it, or does it increase the risks Taiwan faces? This debate is complex, involving various strategic views and interests, and it carries significant implications for global security.
The Dual Nature of the Silicon Shield
The “Silicon Shield” theory suggests that Taiwan’s role in the global semiconductor supply chain acts as a deterrent against China’s aggression. The other side of the coin is the deep interdependence of all parties within the supply chain. The idea is simple: If Taiwan’s chip production were disrupted, the global economy would face catastrophic consequences. Such a disruption would force international powers, particularly the United States, to intervene to protect this vital line.
But while the Silicon Shield might seem like a protective barrier, it’s also a double-edged sword. Chip manufacturing prowess may increase the danger to Taiwan because China may covet it, and the United States may press Taiwan even harder for diversification.
Critics also argue that if China does not fear or respect this shield, it may prove ineffective. Some critics contend that semiconductors may not be the issue for China at all, because its broader ambitions include political and military control of the island. While this argument has merit, it misses the broader picture.
The true power of the Silicon Shield isn’t just in Taiwan’s semiconductor capabilities. It lies in the global consequences of any disruption to the chip supply chain resulting from a conflict over Taiwan or the region. Any attack on Taiwan would threaten more than just Taiwan’s security – it would jeopardize global economic stability. That is the essence of the Silicon Shield.
U.S. Strategies: Reshoring and Friend-shoring
However, another critical factor to consider is asymmetric damage. While China has advanced its own semiconductor industry, disrupting the global supply chain would likely inflict greater damage on the United States and its allies than on China. This potential for asymmetric damage must be fully considered in strategic calculations.
To address vulnerabilities stemming from Taiwan’s place in the supply chain, the United States has adopted reshoring and friend-shoring policies. These strategies aim to rebuild U.S. chip-making capacity, reducing the risks of over-reliance on a single location.
However, these strategies are far from quick fixes. Reshoring semiconductor manufacturing is complex, costly, and time-consuming. It is challenging and expensive to replicate Taiwan’s semiconductor ecosystem elsewhere. This industry benefits from decades of investment in infrastructure, research, and a specialized workforce – advantages not easily replicated.
Until these new fabs are running, the world will continue to rely heavily on Taiwan for semiconductors. Thus a military conflict would trigger a global disaster. This is why the Silicon Shield remains crucial, not just for Taiwan, but for the entire world.
Given these uncertainties, the immediate priority is securing the Taiwan Strait. This region is a potential flashpoint in China-U.S. relations. Any conflict here could have catastrophic consequences, not just for Taiwan but for the global economy. Protecting Taiwan from China’s threats – whether economic coercion, gray-zone warfare, or military action – requires a comprehensive, multi-dimensional approach. Ensuring regional peace is necessary but not sufficient. Taiwan must also take a more active role in international cooperation.
Silicon Shield 2.0: Elevating Taiwan’s Role
To address the complex challenges posed by Taiwan’s position, I propose the concept of “Silicon Shield 2.0.” This initiative seeks to elevate Taiwan’s role in global economic security by more fully integrating it into international production networks, both in terms of supply chain and geography.
Locally, there is often a misunderstanding about the original purpose of diversifying chip-making facilities. Some fear it could lead to dismantling Taiwan’s “Protective Holy Mountain” or hollowing out the industry. Unfortunately, even some U.S. experts misunderstand this. They view the concept of Silicon Shield as a Taiwan-centric perspective.
Under Silicon Shield 2.0, diversification isn’t seen as a threat to Taiwan’s economy and security. Instead, TSMC’s investments in the Global North, such as Arizona in the United States, Kumamoto in Japan, and Dresden in Germany, should be viewed as extensions of Taiwan’s influence. These investments align with the strategic interests of the U.S. and its allies. By doing so, Taiwan fosters deeper interdependence with the West, which enhances the resilience of the supply chain.
Silicon Shield 2.0 is rooted in the high level of mutual dependence within the global semiconductor industry. Taiwan’s exceptional manufacturing technology has developed in close cooperation with the U.S. and other Western countries. Despite criticisms of exploitation or self-sacrifice, it’s important to recognize the work ethic and high standards of Taiwanese engineers and operators. Their dedication has driven Taiwan’s success and made it a critical player in the global tech landscape.
So far, the United States has focused on onshoring as an “insurance policy” while also securing the Taiwan Strait. However, there is another path that is equally crucial: enhancing Taiwan’s participation in international security mechanisms. Silicon Shield 2.0 aligns with this strategy, allowing Taiwan to play a more active role in global security.
The deeper the codependence between Taiwan and the global democratic community, the more urgent the need for collaboration on economic security. Taiwan’s current network of international support is largely bilateral and informal, which is insufficient to address the growing complexities of geopolitics. Expanding Taiwan’s involvement in multilateral mechanisms would benefit not only the United States but also its allies. These mechanisms will give Taiwanese companies a voice on the global stage, enabling Taiwan to participate in a fairer game.
The symbiotic relationship between Taiwan and the United States in the semiconductor sector is well-documented. The U.S. and its allies should reassure Taiwan of their commitment to its broader international participation as it makes new investments in the Global North. If Washington presses harder for diversification without offering more security guarantees and opportunities for international participation, skepticism about U.S. intentions could arise.
To conclude, the Silicon Shield is not just a Taiwan-centric issue – it’s a global one. To forge a secure and resilient semiconductor ecosystem, we need a comprehensive strategy. Silicon Shield 2.0 offers a roadmap for elevating Taiwan’s role in economic security.
Taiwan’s success is a linchpin of global stability, proving that in the interconnected world of semiconductors, security for one is security for all.