By Matt Underwood Taiwan will not agree to a 50-50 chip production deal with the US, and frankly, it’s not surprising. The core of the issue seems to stem from a suspicion, a wariness, that the US might be attempting a form of economic extortion. Why would Taiwan, which holds such a critical position in the global chip supply chain, willingly give up a significant portion of that power?
It feels like the US is attempting to leverage its perceived role as Taiwan’s protector, using it as a means to extract concessions. The underlying fear is that the US, once it secures a piece of the pie, could shift its stance, potentially leaving Taiwan vulnerable. It’s a bit like the old mafia protection racket: you let them in, they want more, and the threats escalate. This is a serious issue, especially with the unpredictable nature of US leadership.
This whole situation highlights the strategic importance of Taiwan’s chip production. The nation’s chip manufacturing capabilities serve as a deterrent against Chinese aggression, and diluting that strength by sharing production undermines Taiwan’s strategic value. If the US takes away Taiwan’s power, why would they protect them?
The US needs to consider that once the advanced chip production moves away from Taiwan, the US’s incentive to defend Taiwan wanes, unless Taiwan offers something of equal value. It is a bit of a dangerous game, as it puts Taiwan in a difficult position: lose protection now, or lose protection later. It’s a gamble, particularly given the current US political climate.
With the global demand for chips being high, the US’s current demands from Taiwan appear to be something that only an immature person would come up with. It’s as if they are saying, “Give up your biggest bargaining chip, and we’ll protect you.” This reminds everyone of similar situations in recent history, like Ukraine’s experience.
There’s a widespread understanding that Taiwan is currently defended because its chip-making capabilities are critical to the US and other nations. Losing Taiwan would be devastating for the global economy and the high-tech sector. Moving any of their production elsewhere dilutes that and makes it less imperative to defend them.
The US cannot afford to allow chip production to be solely controlled by China. If Taiwan were to fall to China, the global high-tech sector would be decimated. It would make the Covid-19 shortages seem like a minor inconvenience.
Taiwan is right to resist moving TSMC production elsewhere to maintain its strategic value and keep the US invested in its defense. The country’s decision reflects a clear understanding of its geopolitical leverage and the need to safeguard its interests.
This is a calculated move to maintain their power, by keeping their most advanced technology at home, it allows them to have influence with the US and prevent any potential invasion. There isn’t any incentive to agree to US’s 50-50 deal, it’s a matter of not giving up the strategic importance Taiwan has.