“Tech is at the center of the global strategic competition, and no tech is more essential to this competition than semiconductors.” So declare Becca Wasser, Martijn Rasser, and Hannah Kelley in a new report from the Center for a New American Security (CNAS). In describing and drawing conclusions from an original global semiconductor competition strategy game, the authors effectively highlight Taiwan’s importance in the worldwide semiconductor supply chain and the challenges and opportunities that centrality poses for Taiwan, the United States, and the People’s Republic of China (PRC). The report, however, gives short shrift to historical context in the Taiwan Strait, and thus overstates tech’s determinative role there.
Taiwan does, of course, occupy a key node in global supply chains that are of importance to numerous countries’ national security. As the authors note, “Taiwan accounts for 92 percent of the world’s most advanced (below 10nm) semiconductor manufacturing capacity, more than 50 percent of overall semiconductor manufacturing capacity, and [is] a key source for silicon wafers.” Wasser, Rasser, and Kelley effectively argue that Taiwan’s domination of the semiconductor fabrication industry makes Taiwan “indispensable in the global market,” and thus reinforces Taiwan’s security. This is Taiwan’s so-called “silicon shield.”
That shield, according to the authors, is becoming a “double-edged sword.” Fundamentally, this is because China wants what Taiwan has: its expertise, its intellectual property, and its industrial capacity. Taiwan’s fabrication plants (fabs), then, are both shield and target; they may invite PRC efforts to seize control of the industry or of the island itself. “Military provocation aside,” the authors write, “Taiwan’s semiconductor industry may be one of the conduits through which China could gain significant control over Taiwan without firing a single shot.”
How so? The details are fuzzy. Wasser, Rasser, and Kelley worry that “China may leverage gray zone tactics to exert de facto control over Taiwan’s semiconductor industry—and Taiwan,” and they rightly note that China has a long menu of potential coercive actions it could use in this regard. The authors, however, do not explain the mechanics of how this effort might actually work in practice. “Gray zone” tactics present genuine challenges, but here they are treated as a magic wand China can wave over Hsinchu (the location of a major semiconductor industrial center) to solve its Taiwan and semiconductor challenges in one fell swoop.
What is more, the authors do not grapple with China’s mixed record in achieving desired results from the use of “gray zone” tactics. As examples, they highlight the economic punishment of Australia in recent years, the use of “Coast Guard and commercial vessels to physically coerce civilian fishing boats and exert China’s territorial claims,” and the detention of Michael Kovrig and Michael Spavor following Canada’s arrest of Meng Wanzhou (孟晚舟). China’s gray zone maritime tactics have been successful to an extent in the South China Sea (though arguably not in the East China Sea), but punishment of Australia has clearly backfired. In the case of Meng, meanwhile, Ottawa never buckled. For its part, the United States may have given in to China’s hostage diplomacy, but it is too soon to say: Meng’s deferred prosecution agreement should enable the US Department of Justice to more effectively pursue charges against Huawei, a far bigger target.
These examples aside, the authors make no effort to assess Taiwan’s own history in dealing with China’s efforts in the gray zone. Taiwan and China have engaged one another in political warfare, a key aspect of gray zone warfare, for the better part of a century now. While the PRC threat must often seem overwhelming—it is constant, ever-present, and does have real-world effects—Taiwan has managed it well in recent years. Despite China’s best efforts, Tsai Ing-wen (蔡英文) overwhelmingly won successive presidential elections. Taiwan’s current government has not conceded to Beijing’s demand that Taipei recognize and abide by the so-called “1992 Consensus” (九二共識). And even as China has kept Taiwan out of various international organizations and poached its formal diplomatic allies, the island nation has successfully drawn closer to the United States and a number of other foreign partners in recent years. Put simply, Chinese disinformation campaigns, military coercion, political interference, economic leverage, and media warfare have failed to bring unification closer to fruition, to bring large numbers of China-friendly politicians to power in Taiwan, or even to further isolate Taiwan on the global stage.
To be sure, past performance (or lack thereof) is no guarantee of future results. Chinese coercion could work in the future, and Beijing has a deep “gray zone” toolbox stocked with plenty of as-yet-unused implements. Yet, if a future Chinese decision to seize control of Taiwan’s semiconductor industry is a real concern, it is natural to question whether China would opt for a strategy that, in other contexts, has had mixed results at best and that requires actors in Taiwan to ultimately make the decisions Beijing wants them to take. Taiwan gets a vote, and perhaps a far weightier vote than it would get if China were to seize the island by force outright.
This recognition, in turn, raises another question: would a desire for chips ever drive Beijing to invasion? It is possible, but that is likely not the primary scenario for which Taiwan, the United States, and other concerned parties should be preparing. Because the report lacks historical context, it presents the semiconductor struggle as foundational. As the authors write, “Taiwan’s security is inextricably intertwined with its semiconductor industry,” and with one company in particular: Taiwan Semiconductor Manufacturing Company (TSMC). “Taiwan’s long-standing techno-nationalist strategy,” Wasser, Rasser, and Kelley argue, “entrenches the notion that the United States and other actors have a vested interest in Taiwan’s sovereignty.”
Perhaps that is the case now, but it is worth considering that Chinese and American interests in Taiwan long predate Taiwan’s semiconductor industry, which got its start in the mid-1970s when RCA began manufacturing chips on the island. TSMC was founded in 1987, only 25 years ago. Of course, chips were not a concern when the United States and the Republic of China, then on Taiwan, signed a mutual defense treaty in 1954, nor were they much of a concern when Congress passed and Jimmy Carter signed the Taiwan Relations Act in 1979.
Semiconductors likewise cannot explain Beijing’s decades-long desire to annex Taiwan, which has its roots in factors ranging from the “unfinished” civil war and an ethnonationalist worldview to geostrategic reasoning and imperial aspirations. The ultimate “reunification” of Taiwan with China has long been a central promise of the Chinese Communist Party (CCP). The CCP’s ruling legitimacy is intertwined with its “sacred mission” to bring Taiwan into the fold. In theory, the desire for a secure chip supply could provide the impetus that pushes China to war, but given that the island itself—not TSMC—is the prize that Beijing has long desired, other factors are likely to be far more important in shaping a decision to use force.
Consider a thought experiment: If Beijing could secure a reliable supply of advanced semiconductors by formally accepting Taiwan’s permanent separation from China, would Xi Jinping make that trade? Almost certainly not. On the other hand, it is not at all clear that the promised destruction of Taiwan’s semiconductor fabs and the exodus of the brains behind them would deter Beijing from attacking if Xi was moving closer to making that call.
Technology undoubtedly plays an important role in the US-China strategic competition and in the Taiwan Strait. Drawing lessons from “The Chips Are Down” game, Wasser, Rasser, and Kelley usefully highlight a number of steps the United States, Taiwan, and likeminded partners can take to enhance economic and national security and ensure the reliability of global semiconductor supply chains. Perhaps unintentionally, however, their report distills both the strategic competition and Taiwan’s security down to a question of who controls the world’s semiconductor supply. It is an oversimplification that risks undermining appreciation for the complex dynamics at work in the Taiwan Strait, and encouraging an unwarranted focus on what is likely a secondary factor driving Beijing’s Taiwan policy.
The main point: Technology plays an important role in the US-China strategic competition and in the Taiwan Strait, but concerns about semiconductor supply are only a secondary driver of China’s Taiwan policy.
