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The US would sooner see TSMC fabs burn than let China have them

Successful invasion would make China 'the OPEC of silicon chips'

The US would sooner see TSMC fabs destroyed than fall into Chinese hands should Xi Jinping invade Taiwan, according to a former national security advisor to the Trump administration.

“The United States and its allies are never going to let those factories fall into Chinese hands," Robert O’Brien said at the Global Security Forum in Qatar this week.

In O’Brien’s mind, a successful invasion of Taiwan would reposition China as the leading semiconductor manufacturing power almost overnight. Or as he put it, China would become “the new OPEC of silicon chips.” O’Brien contends the US will destroy Taiwanese fabs to prevent China from gaining the technological advantage.

Of course, doing so would have severe consequences for the world economy. Last year the US National Security Agency estimated the loss of TSMC at more than $1 trillion dollars.

The former advisor’s comments breathe new life into rumors that the US would enact a scorched-earth policy to prevent sensitive semiconductor tech from falling into Chinese hands.

While the current and former president don’t align on many policy issues, both have taken a hawkish stance against the Chinese semiconductor industry during their tenures. In fact, the current administration has taken a considerably harsher stance with regard to the Middle Kingdom’s domestic semiconductor industry.

Over the past year, the US Commerce Department has taken steps to control the flow of US chips, intellectual property, and manufacturing equipment to China. And more recently, the administration has — to mixed results — pressured its allies in The Netherlands and Japan to follow suit.

Playing the long game

Xi Jinping has made no attempt to hide his ambition of reunifying the island nation with the mainland. While Taiwan has operated as an autonomous democracy, officials in Beijing maintain the island and its people are part of China.

But beyond Xi’s political ambitions, Taiwan is also of tremendous strategic value. The country is home to TSMC, which produces chips for the likes of AMD, Apple, Nvidia, Intel, and Qualcomm to name a few.

Several Chinese companies, however, have found themselves cut off from TSMC facilities as the foundry operator has been forced to comply with ever stricter export bans on US intellectual property.

Of course, this isn’t the first time someone has suggested blowing up TSMC’s fabs. In a 2021 paper, the US Army War College said Taiwan could prevent an invasion by threatening to destroy its own semiconductor industry.

The argument being that the potential for war with the US over Taiwan did not pose enough of a deterrent for China. So, the authors argued that the government should make the island as inhospitable as possible — namely by destroying TSMC’s fabs.

However Taiwanese officials have argued that such extreme measures aren’t warranted. Last fall Chen Ming-tong Taiwan’s director-general of the nation’s National Security Bureau, responded to these suggestions, arguing that should they fall into Chinese hands, TSMC’s fabs would be all-but worthless.

TSMC is highly reliant on a steady supply of materials and equipment from the likes of the Netherlands chip builder ASML. This fact was central to Chen’s argument, as cut off from global material supplies, intellectual property, electronic design software, and manufacturing equipment, the fabs would quickly grind to a halt.

The Register asked the White House for comment on their official policy on the matter; we’ll let you know if we hear anything back. ®

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