Taiwan and the Geopolitics of Microchips

If semiconductors are the “new oil,” then Taiwan’s dominance in making tiny chips packs a huge punch.

Last week, Ford Motor Co. became the latest in a bevy of carmakers to announce production halts due to a global shortage of microchips. The Chinese military tested a sophisticated new armed reconnaissance drone and conducted a massive exercise in the South China Sea simulating an amphibious assault on Taiwan. President Xi Jinping ordered the People’s Liberation Army to “substantially increase” the use of new technologies in such exercises. The U.S., meanwhile, expanded its ban on doing business with Chinese companies linked to the People’s Liberation Army and dealt yet another blow to Chinese telecom giant Huawei. It also released new rules on securing information and communications technology supply chains. Intel Corp., the embattled inventor of the microprocessor, fired its CEO. What these disparate events have in common is that each, in its own way, underscores the singular geopolitical importance of a single company, Taiwan Semiconductor Manufacturing Co. The company, which itself made news by announcing plans to boost spending by as much as $28 billion this year to expand capacity, has developed a stranglehold on production of the world’s most advanced chips. This makes TSMC indispensable to just about any global power aiming to, say, develop an elite arsenal […]

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Phillip Orchard
Phillip Orchard is an analyst at Geopolitical Futures. Prior to joining the company, Mr. Orchard spent nearly six years at Stratfor, working as an editor and writing about East Asian geopolitics. He’s spent more than six years abroad, primarily in Southeast Asia and Latin America, where he’s had formative, immersive experiences with the problems arising from mass political upheaval, civil conflict and human migration. Mr. Orchard holds a master’s degree in Security, Law and Diplomacy from the Lyndon B. Johnson School of Public Affairs, where he focused on energy and national security, Chinese foreign policy, intelligence analysis, and institutional pathologies. He also earned a bachelor’s degree in journalism from the University of Texas. He speaks Spanish and some Thai and Lao.