Ongoing tensions between China and Taiwan could inflict significant damage to the US economy due to America’s high dependence on Taiwanese semiconductor imports, analysts say. Furthermore, semiconductor production in mainland China is also growing rapidly.
The US production of high-tech goods could be affected by a military conflict between Beijing and Taipei that would threaten semiconductor exports to the US. Taiwanese semiconductors are used in American personal computers, cars, medical equipment, AI devices, communications equipment, and other advanced products.
The US economy lost an estimated $240 million in 2021 due to the semiconductor crunch, and a war in Taiwan could seriously exacerbate the situation, experts say. If the Taiwanese Semiconductor Manufacturing Company (TSMC) stops production, the resulting lack of microchips will severely undermine the US economy.
Earlier, the Biden administration acknowledged America’s reliance on TSMC, which produces 90% of the world’s advanced microchips. Many US tech companies, such as Apple, Intel, NVIDIA, Qualcomm, AMD, and Broadcom, use microchips by TSMC. The Taiwanese manufacturer’s products can be found in many complex systems, including weapons.
The government of Taiwan is wary of a possible disruption of the global semiconductor market by the escalating conflict. Zach Nunn, former director of cybersecurity for the White House National Security Council, noted that a shortage of semiconductors and a lack of production capabilities poses a threat to the US economy.
Furthermore, Taiwanese semiconductor factories are highly dependent on shipments of materials from mainland China. Earlier, Beijing limited exports of quartz sand, which is used in the production of semiconductors, to Taiwan.
Additionally, the US could be lagging behind China in the development of high-tech industries, which puts extra pressure on the US economy. Chas Freeman, former Assistant Secretary of Defense for International Security Affairs, stated that 19 out of the 20 world’s fastest growing semiconductor companies are located in mainland China.
China occupies a 15% share of the world’s semiconductor market. Chinese companies are also expanding microchip production. The US share in the chip market fell to 12% from 37%.
Chas Freeman also believes that the US education system is lagging behind its Chinese counterpart. According to Freeman, Chinese universities now graduate at least four times as many students as the United States in science, technology, engineering, and math. The advantage of the Western model of technological development is questioned by some experts, who say the experience of China should not be ignored.
