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What would a war between Taiwan and China mean for technology?

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Military Rhetoric Between China and Taiwan Rises as House Speaker Nancy Pelosi visit the country.

Chinese fighter jets flew past the Taiwan Strait on Tuesday morning for Pelosi’s visit, and the Taiwanese government said it was come under cyber attack. And China has warned that Pelosi’s visit could lead to “disastrous consequences.”

Pelosi is the most senior US official to visit the island in 25 years. While Taiwan is a self-governed democracy, China claims it as part of its territory. And the visit has resulted in the communist nation positioning itself for military exercises, firing missiles into the Taiwan Strait and sending more planes and naval ships closer to the island.

While it’s still a big unknown whether China will invade or just take a stance, Taiwan’s importance in the tech world is undeniable. The country produces more than 90% of the world’s most advanced semiconductors, with exports of $118 billion last year. And it’s home to Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s most advanced chip factory, which includes prestigious names such as AMD, Apple, Nvidia, ARM and others.

Without those chips, the frustrating delays we’ve faced in the pandemic years in buying a new car or laptop or finding a new video card or PlayStation will seem to consumers like the hallcyon days of yore. And technological progress in many areas can virtually grind to a halt.

In a recent rare interview with CNNTSMC President Mark Liu said an invasion would seriously disrupt the economies of not only Taiwan and China, but most Western countries as well.

“War brings no winners. Everyone is the loser,” he said. “If you undertake a military force or an invasion, you will return the TSMC factory” [inoperable]. Because this is such an advanced manufacturing facility, it relies on a real-time connection to the outside world, to Europe, to Japan, to the US, from materials to chemicals to spare parts to engineering software and diagnostics.”

While Russia’s invasion of Ukraine has certainly affected global trade routes, disrupting gas prices and soaring food prices across Europe, Taiwanese officials say an attack on their country by China would have a greater global impact, affecting industries ranging from automakers and personal electronics are affected. to home entertainment.

“There would be a global supply shortage,” said John Deng, Taiwan’s top negotiator told Reuters earlier this year.

The Taiwanese army has been holding its own exercises for the past week, while the army of the People’s Republic of China has stepped up its saber rattle. But the numbers are not on Taiwan’s side. China has 412,000 ground troops in its eastern and southern fleets; Taiwan has 88,000. The island nation is also woefully outnumbered in fighter jets, submarines, frigates and destroyers – and has no aircraft carriers at all.

If there is a conflict, the shipping lanes (which are among the busiest in the world) would not be safe to pass. In the first seven months of the year just under half of the world’s 5,400 container ships made use of the Taiwan Strait, transporting not only semiconductors and mobile phones, but also clothing and appliances. About 88% of the largest container ships use the waterway.

And if the US got involved in a war with China over Taiwan? A study by the Rand Corporation says this could lead to a 5% to 10% cut in US gross domestic product.

And while the TSMC president says an invasion would render his factory useless, if China somehow took over the facility and got it back up and running, it would give the country a huge global technological advantage and create a nightmare scenario. for Homeland Security officers and others.

That was almost certainly a factor in the passage of the CHIPS and science law last week. The bill, signed into law by President Biden on Tuesday afternoon, will provide billions of dollars in incentives for chipmakers to build factories in the US

Intel will be one of the main beneficiariesbut TSMC could also benefit as the company works on a $12 billion manufacturing facility in Arizona.

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