An invasion of Taiwan would shut down global chip production as 'nobody can control TSMC by force.'

TSMC
(Image credit: Taiwanese Semiconductor Manufacturing Co.)

This week saw US House Speaker Nancy Pelosi visit Taiwan. She is the highest level US government official to visit Taiwan in 25 years. The subsequent reaction by China, including ongoing island encircling live fire military exercises, threatens an already precarious geopolitical situation.

Taiwan-based Taiwan Semiconductor Manufacturing Company (TSMC) is Asia's most valuable company. It makes many of the chips we talk about at PC Gamer, including the CPUs and GPUs in our PCs, and the chips in our phones. Given the importance of TSMC, not just to the global technology industry but to the global economy itself, these latest tensions threaten nothing less than disaster. And that's all before considering the humanitarian, political, and military consequences of a Chinese invasion.

TSMC chairman Mark Liu was interviewed by CNN’s Fareed Zakaria. When asked if TSMC was a deterrent or a catalyst to a possible war, Lui said: "Nobody can control TSMC by force. If you take a military force or invasion, you will render TSMC factory not operable. Because this is such a sophisticated manufacturing facility, it depends on real-time connection with the outside world, with Europe, with Japan, with US, from materials to chemicals to spare parts to engineering software and diagnosis."

Major companies like Apple, AMD, Nvidia, Qualcomm, and even Intel rely on TSMC for chip production. If production were to cease, the supply of many of these products would dramatically shrink. That alone wouldn't be catastrophic, but the effect on the stocks of big blue-chip companies would take a beating and it would all snowball from there. We'd get a stock market crash, financial system stress, a global recession, unemployment and so on and so on. And what if the US steps in to defend Taiwan? I don’t even want to go there.

TSMC supplies a large volume of chips to Chinese companies, too. Which means it would also suffer economically from the collapse of manufacturing within its foundry business.

The current tensions shine a spotlight on the global reliance on TSMC. Just last week the US Congress passed the Chips and Science act, which in part allocates billions of dollars in subsidies to entice chip makers to build facilities in the US. A part of the reason for this bill was to diversify chip manufacturing and give it a buffer against a possible Chinese invasion. National security and all that.  

President Biden is expected to sign the Chips and Science act into law on August 9. It was delayed after he suffered a Covid relapse.

TSMC's Fab 14

(Image credit: Google)

In one of possibly many deals to come, MediaTek, the world's largest smartphone chipset vendor, signed a deal with Intel to manufacture certain products outside of Asia. MediaTek is a Taiwanese company and is a major TSMC customer. A big customer like this backs Intel's decision to heavily invest in US and European chip manufacturing, including its $20 billion investment in two facilities near Columbus, Ohio.

Your next upgrade

(Image credit: Future)

Best CPU for gaming: The top chips from Intel and AMD
Best gaming motherboard: The right boards
Best graphics card: Your perfect pixel-pusher awaits
Best SSD for gaming: Get into the game ahead of the rest

If China and Taiwan tensions don't ease off, it's only a matter of time before other companies take steps to reduce their reliance on TSMC, if they aren't already. Many companies are still suffering from supply chain woes induced by the pandemic, while others are affected by the war in Ukraine. The disrupted supply of neon gas is just one example of the effects of that war.

All we can do is hope that calm heads prevail. I'm only talking about the tech side here, but wars cause so much more damage than that. Paying more for a chip is one thing, but actual conflict is something entirely different. 

TSMC Chairman Liu summed it up succinctly. "A war brings no winners, everybody's losers."

Chris Szewczyk
Hardware Writer

Chris' gaming experiences go back to the mid-nineties when he conned his parents into buying an 'educational PC' that was conveniently overpowered to play Doom and Tie Fighter. He developed a love of extreme overclocking that destroyed his savings despite the cheaper hardware on offer via his job at a PC store. To afford more LN2 he began moonlighting as a reviewer for VR-Zone before jumping the fence to work for MSI Australia. Since then, he's gone back to journalism, enthusiastically reviewing the latest and greatest components for PC & Tech Authority, PC Powerplay and currently Australian Personal Computer magazine and PC Gamer. Chris still puts far too many hours into Borderlands 3, always striving to become a more efficient killer.

Read more
TSMC's Fab 14
China taunts Taiwan with claim that chip foundry TSMC could soon become 'USSMC' or the 'United States Semiconductor Manufacturing Co.'
A chip being held up in an Intel fab
Intel is reportedly in talks to spin off its chip factories into a partnership with arch rival TSMC and now I think I've seen everything
TSMC
TSMC and Trump announce massive $100 billion investment in the US including 3 new fabs but it's reasonable to ponder whether it will actually happen
American Business. American Flag, Modern Financial Building, Conceptual View
'The only way to beat China is to stay ahead of them' says US commerce secretary as she backs CHIPS investments handed out to Intel, TSMC over sanctions
Intel engineers work in Fab 34, the newest Intel manufacturing facility in Ireland
Intel engineer begs management and Trump to not 'sell out' to TSMC just as the company is set to regain its 'technical lead' in chip manufacturing
 photo shows a factory tool that places lids on data center system-on-chips at an Intel fab in Chandler, Arizona, in December 2023. In February 2024, Intel Corporation launched Intel Foundry as the world’s first systems foundry for the AI era, delivering leadership in technology, resiliency and sustainability.
So, wait, now TSMC is supposedly pitching a joint venture with Nvidia, AMD and Broadcom to run Intel's ailing chip fabs?
Latest in Hardware
A pink GameSir Nova Lite, and a purple 8BitDo Ultimate 2C float in a teal void.
Hall effect controllers are so cheap now I’ve got a deal for you AND your player two
Peely from Fortnite with banana-fied Wolverine claws.
Fortnite comes to Snapdragon: Epic Games announces upcoming Arm support for its Easy Anti-Cheat software
Texas Instruments MSPM0C1104 tiny chip
World's smallest microcontroller looks like I could easily accidentally inhale it but packs a genuine 32-bit Arm CPU
Varjo Aero
Varjo Aero VR headsets seem to be not working on RTX 5090s, and its community is opting for strange solutions while waiting for an Nvidia driver release to fix it
A pasta "display" on a table showing the word "keep" surrounded by fruit. Obviously.
Penne for your thoughts: This pasta display can show three individual frames and it's trying its best, okay
Intel engineers inspect a lithography machine
Finally some good vibes from Intel as stock jumps 15% on new CEO hire and Arizona fab celebrates 'Eagle has landed' moment for its 18A node
Latest in News
Crying laughing emoji with disturbing realistic elements for REPO
REPO's first update will add a new map and a 'duck bucket' so we can finally give that pesky quacker a time out
Man facing camera
The Day Before studio reportedly sues Russian website for calling infamous disaster-game a 'scam'
Will Poulter holding a CD ROM
'What are most games about? Killing': Black Mirror Season 7 includes a follow-up to 2018 interactive film Bandersnatch
Casper Van Dien in Starship Troopers
Sony, which is making a Helldivers 2 movie, is also making a new Starship Troopers movie, but it's not based on the Starship Troopers movie we already have
Assassin's Creed meets PUBG
Ubisoft is reportedly talking to Tencent about creating a new business entity to manage Assassin's Creed and other big games
Resident Evil Village - Lady Dimitrescu
'It really truly changed my life in every possible way': Lady Dimitrescu actor says her Resident Evil Village role was just as transformative for her as it was for roughly half the internet in 2021