By Gerald F. Seib – Yet both the economic vulnerability and geopolitical risk are more acute than that picture makes it appear. A single company in Taiwan, Taiwan Semiconductor Manufacturing Co. , makes almost all of the world’s most sophisticated chips. It is the world’s most important semiconductor company, and its 11th most valuable one.
And what if that Taiwanese company becomes a Chinese company? Chinese President Xi Jinping this month repeated his intention to complete “reunification” with Taiwan, and the head of U.S. forces in the Pacific recently warned China could invade Taiwan by 2027 to do exactly that. While other military leaders don’t think the Chinese timetable for action is that aggressive, a takeover of Taiwan would put China in an overwhelmingly dominant position in the semiconductor business, at a time when computer chips are becoming a strategic commodity just as important as oil became in the 1970s and 1980s.
In short, the specter of semiconductor dominance could provide China an added incentive to move on Taiwan, and the U.S. an added incentive to stop China from doing so. It’s no exaggeration to say that semiconductors have the potential to cause international tension and turmoil—and even, in an extreme scenario, war. Read More