Taiwan is undermining its own ‘silicon shield’
- For an economy that relies so much on microchips from the low end to the most advanced, its worsening relationship with Beijing is forcing others to diversify critical supply chains and production facilities
In recent years, Taiwan under the Democratic Progressive Party has successfully “internationalised” its dispute with mainland China over unification. At least that’s true with respect to the United States and its allies, who have exploited the opportunity to expand their geopolitical interference in the Asia-Pacific region. But that has worked too well and may now be backfiring on the island.
The Inter-Parliamentary Alliance on China (IPAC), made up of mostly Western hawkish politicians, has come up with “Operation MIST”, or Measure the Impact of a Shock in the Taiwan Strait. Inadvertently, it’s a stark reminder that the world can’t rely so much on the island’s near chip-making monopoly.
MIST is supposed to appeal to governments all over the world, but it’s unlikely to have much impact beyond preaching to the converted. Most other countries would rather stay out of any fight across the Taiwan Strait.
Even French President Emmanuel Macron has said before that the European Union should not get involved in “crises that aren’t ours”, in a clear reference to Taiwan.
The island, though, seems to welcome the latest initiative. It should really be wary of it. The Taiwan Ministry of Foreign Affairs has issued a statement expressing “its welcome and appreciation of this initiative”.
As MIST implies, it wants more governments to be alert about the dangers to the global economy stemming from a conflict across the Taiwan Strait. That presumably includes the risk of relying too much on Taiwan in terms of critical global supply chains and the freedom of navigation. But, when you boil right down to it, it’s all about microchips. At least that is the one industry that everyone around the world does fret about when it comes to Taiwan.
The island produces more than 60 per cent of the world’s semiconductors and over 90 per cent of the most advanced ones. That has sometimes been called Taiwan’s “silicon shield”. A sudden disruption of the chip supply chains would have unimaginable impact across global industries that use micro-processing chips, in other words, every industry. And China is the world’s largest buyer of chips, from low-cost ones to the most advanced, whose access is now being restricted by the United States and some of its allies.
So, the argument goes, mainland China wouldn’t dare attack the island as that could potentially undermine its own manufacturing industries across the board. A former US national security adviser has advocated that Taiwan’s chip-making facilities be destroyed in the event of an armed conflict on the island rather than let them fall into Beijing’s hands.
But here’s the deal with Operation MIST. What it will end up reinforcing, though everyone who has been involved in Taiwan Strait issues is long aware, is the realisation about the critical importance of diversifying chip production away from the island.
Its biggest chip producers have already been pressured to invest in new facilities in the US, Germany and Japan. It’s not just about helping two Western allies to re-industrialise but to guarantee continuity of production in the event of an open conflict.
But if Taiwan faces losing its near monopoly on chip production, it also may become less important industrially to the rest of the world. And the silicon shield against mainland aggression? Obviously, it will be weakened, too.
To get a better idea about IPAC, follow the money. It’s mostly funded by the Open Society Foundations, an outfit of multibillionaire George Soros, the National Endowment for Democracy, a US-funded propaganda unit that did so much to finance and train the opposition in Hong Kong, as elsewhere around the world, and the Taiwan Foundation for Democracy, which is self-explanatory.
This latest initiative doesn’t seem to be doing Taiwan any favours. The island’s tech sector is key to its economy, and it is almost all about making chips for the world. But Taiwan doesn’t design advanced chips, it just makes them on contract. That means the industry is, over time, replaceable and can be relocated to other countries.
Once it loses its industrial importance, its relevance will be no more than a geopolitical pawn for Washington. Getting laid waste like Ukraine and Gaza and so many other places before for the sake of the American empire is not a fate to which Taiwanese should aspire.
