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Why would the US defend Taiwan against China? Microchips!

With the advancement of technologies in the last century, there is a growth in demand for products with more advanced advanced embedded technology more specialized. The semiconductor microchip industry represents the future of much of the industry.

The main producer of these chips is Taiwan Semiconductor Manufacturing Co (TSMC), which holds 53% of the current market supply for companies like Apple and Intel. Created in 1987, with the goal of producing for third parties, the company achieved revenue of US$33 billion in 2017 and US$440 billion in 2020.

Microchips, Semiconductors, Defense Taiwan, United States, USA
Source: Pexels

Taiwan’s quasi-hegemonic microchip production has been its advantage in the market and guarantee of an informal agreement with the United States for its security and defense against China.

The President of the United States, Joe Biden, said that the exponential growth of Taiwan economically in the electronic market represents “disruption in the supply chain [and] can endanger the lives and livelihoods of Americans,” as it creates a dependency on supply.

TSMC is investing in its growth and advancement in technologies, with US$100 billion the forecast is to reach the production of 5 nanometer chip, competing with the only current producer of this technology Samsung Electronics from South Korea. With this planning, the company says it is able to have a 60% presence in the supply of the market, which will help in the economic reestablishment after-COVID.

The major dispute involving Taiwan’s microchips is in the US strategic ambiguity with the country.

This ambiguity occurs because the United States cannot lose its main supplier of semiconductors, but cannot declare the unconditional defense of Taiwan since they do not want to wage a direct military conflict with China. China has an interest in Taiwan’s electronic production to advance as an Asian hegemonic power.

So what we see is a grey area of conflict.

With the advancement of 5G and 6G technology, a project that has a lot of Chinese investment, the microchip industry grows to meet this demand (about 5% annually).  

This means that the United States has the interest of a certain commitment to Taiwan because, in addition to needing its supply of chips, there is an interest in preventing Chinese growth. Economically, China is gaining in importance and the US needs to ensure that the world’s microchip-dependent value chains are not affected, and thus do not threaten the main economic power.

Biden has a large investment currently in a development of industrial independence, about US$2 trillion in infrastructure being US$50 billion to boost semiconductor competitiveness. The importance of this action is the attempt to get out of this subordinate relationship with Taiwan. But still its production structurewill take a long time, potentially replacing the production coming from Taiwan.

Therefore, the indirect contract between the US and Taiwan is between the lines, in which there are needs that only Taiwan can help, as well as a security that only the United States can guarantee.


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