If strains between China and Taiwan continue to worsen, the People’s Republic has a trump card: threatening to cut off the island’s exports, which include products from pivotal chipmaker TSMC, says GinaChon:
, Qualcomm , and other industrial giants with key components. It should be enough to make even Americans - who otherwise remain largely uninterested - nervous.
Pelosi’s trip earlier this week was the first time a U.S. House speaker has gone to the region since 1997. Beijing, which is in a much stronger position now, responded by launching its largest military drills ever in the Taiwan Strait on Thursday, which included firing missiles and dispatching aircraft to the area. The People’s Republic could threaten to retaliate further. A naval blockade and a no-fly zone, for example, could in theory keep Taiwan’s main products from heading around the world.
China, too, would face consequences if it were to make life difficult for TSMC. Mainland chipmakers, handset brands, electric vehicles and more rely on the $447 billion company’s cutting-edge technology just as much as their U.S. rivals. That makes it less likelyRegister now for FREE unlimited access to Reuters.comStill, the strength of TSMC puts U.S. companies, who have many friends in Washington, on the back foot.
Isolating or disrupting TSMC would be a fresh disaster for the global economy. As tensions rise to threats that can cause real consequences, China holds a big chip in its hand.China fired multiple missiles near Taiwan on Aug. 4, a day after U.S. House of Representatives Speaker Nancy Pelosi visited the island claimed by Beijing. It was the largest military drills in the Taiwan Strait.
Separately, TSMC Chair Mark Liu told CNN that the company’s advanced chip factory would become inoperable if China invaded Taiwan, according to an interview aired on July 31. TSMC has more than 50% share of the global market for contract chip-making, according to Bain & Company.Our Standards:
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