The U.S. Needs a Secure Taiwan, Not Just its Semiconductors

March 27, 2024 Topic: Security Region: Asia Blog Brand: The Buzz Tags: TaiwanChinaOne China PolicySemiconductorsWar

The U.S. Needs a Secure Taiwan, Not Just its Semiconductors

Far from being a liability, Taiwan is indispensable to the prosperity and security of the United States.

With tensions simmering in the Taiwan Strait, some in Washington have begun questioning the wisdom of America’s long-standing commitment to Taiwan’s security. They rightly view the U.S. government’s main responsibility as keeping Americans safe and fear that supporting an island halfway across the world could draw the United States into a damaging war with China. If only we could become less reliant on Taiwan for semiconductors, the thinking goes, America could absolve itself of this commitment.

It isn’t that simple. American economic and security interests depend on keeping Taiwan safe from Chinese aggression. This will remain true for the foreseeable future, regardless of policy interventions aimed at reducing our semiconductor dependence.

Taiwan spent four decades developing the world’s most complete semiconductor industry cluster, and it will likely continue dominating this sector for decades to come. Not only can it produce chips at 50 percent less cost than the United States, but it supplies 60 percent of all semiconductors globally and has a near-monopoly—92 percent—of the most advanced logic chips. The notion that the United States or any country can replicate this in the short or medium term is naïve at best.

Just ask China. It has spent countless billions of dollars since 2015 to reach its goals of 40 percent chip self-sufficiency by 2020 and 70 percent self-sufficiency by 2025. Yet, as of 2023, it was only 20 percent self-sufficient, and its technology remained far behind the world leaders.

Furthermore, Taiwan is a top ten U.S. trading partner, and its importance to the U.S. economy and global supply chains extends well beyond semiconductors. Taiwan plays a dominant role in global manufacturing across industries, from tennis shoes to bicycles to laptops. Just as U.S. semiconductor giants such as Qualcomm and NVIDIA rely on Taiwanese foundries to make their chips, global retailers and consumer brands have come to rely on Taiwanese contract manufacturers to make—and often even design—their products at a price and quality their competitors in other countries have never been able to match. Most of these products may be assembled in China or Vietnam, but the firms that make them are often based in Taiwan.

Taiwanese firms are particularly dominant in consumer electronics. While Apple, Dell, and Hewlett-Packard assemble many of their products in China, many of the most high-tech components come from Taiwan. Furthermore, the companies assembling most of them in China—Foxconn, Wistron, and Pegatron, for example—are Taiwanese companies. As the Financial Times stated last year, even if the United States miraculously became self-sufficient in semiconductors, a Chinese attack on Taiwan would leave us with “‘Made in America’ chips and no devices to put them in.”

This is not an argument about the merits of globalization, but an acknowledgment of the reality Americans will continue to face for the foreseeable future. If a war hampered the ability of these Taiwanese firms to operate—or caused them to pause or cease their China operations to comply with sanctions—much of global manufacturing would grind to a halt, threatening a possible economic depression. Bloomberg Economics recently estimated the loss would amount to a whopping 10 percent of global GDP. This is just one estimate—the total impact could be even worse.

Finally, economics aside, it is hard to overstate how important Taiwan is to the national security of the United States.

For one, Taiwan sits astride some of the most important sea lanes for global trade. According to Bloomberg data, half the world’s container ships and 88 percent of the largest ships transited the Taiwan Strait in 2022. The United States simply cannot afford to let an adversarial regime like the Chinese Communist Party control these strategically vital waterways.

Chinese control of Taiwan and its surrounding waters would directly threaten key U.S. allies, especially neighboring Philippines, as well as Japan, which depends on these sea lanes for nearly all its energy resources. These allies would likely be compelled to join the fight to defend their interests, making it highly unlikely the United States could remain neutral.

Even if the United States managed to stay out of a conflict over Taiwan, the island’s fall to Beijing would strengthen China’s position vis-à-vis America and make a future conflict even more likely.

Taiwan occupies a vital node in the “first island chain,” a network of islands controlled by U.S. allies that stretches from Japan to Southeast Asia. Chinese control of Taiwan would thus enable Beijing to break through America’s first line of defense and project force into the Pacific in pursuit of regional hegemony. By definition, to achieve hegemony in Asia, China would have to push the U.S. military out of Asia, and its control of Taiwan would enable it to more aggressively pursue this objective, further driving escalation risks.

If China ultimately succeeded in achieving hegemony in Asia, U.S. Pacific territories such as Guam and the Northern Mariana Islands would be in direct danger. The threat could even extend to Hawaii and the continental United States.

Far from being a liability, Taiwan is indispensable to the prosperity and security of the United States. While Washington should avoid acting in a way that would inadvertently trigger a military response from Beijing, it must also continue to strengthen Taiwan’s defenses and ensure Beijing knows any attack on the island would not only fail, but cost China dearly.

About the Author 

Michael Cunningham is a research fellow at the Heritage Foundation’s Asian Studies Center.

Image Credit: Shutterstock.