TSMC Chairman: Fabs Would Be ‘Not Operable’ If China Invades

Tensions are running high as Speaker of the House Nancy Pelosi touched down in Taiwan today. The controversial visit was undertaken despite stark warnings from the Chinese government of “forceful measures” if she went through with it. She is the highest-ranking official to visit the self-ruled island since Newt Gingrich in 1997.

The Chinese government sees it as an unnecessary escalation by the West. That’s despite National Security Council spokesman John Kirby stating on Monday that the US doesn’t support Taiwan’s independence. It’s with this escalation in mind that CNN’s Fareed Zakaria sat down with TSMC chairman Mark Liu for a rare interview. The big question of course was what would happen to TSMC if China invaded? It’s a scenario that’s been envisioned for years, but now, for the first time, seems like a real possibility.

In the interview, Liu was defiant when asked about a theoretical invasion. “Nobody could control TSMC by force,” he stated. He added that if the military tried to take over TSMC’s factories, they’d become “not operable.”

This is due to the inherent sophistication of the manufacturing process. Liu said it depends on real-time connections with global supply chains in the US, Europe, and Japan. These connections are what keep the fab running with materials, chemicals, diagnostic software, and more. China also depends on TSMC as well, which he said is 10 percent of its business. He noted that TSMC only works with China’s consumer market, not its military. CNN said China buys 90 percent of its silicon from other countries.

Liu said China’s dependency is “not a bad thing,” indicating he’s confident China wouldn’t invade solely for selfish reasons. Fears over the disruption of the Taiwanese chip supply and the resulting economic damage have been termed a “Silicon Shield” by analysts. It wouldn’t just be a Chinese problem though; US Commerce Secretary Gina Raimondo warned about it recently as well. She stated the US would go into a “deep and immediate” recession if US firms were abruptly cut off from TSMC’s supply. Apple, AMD, Nvidia, and Intel all depend on TSMC for their most advanced products. It’s one of the primary reasons the CHIPS Act was passed this week. It seeks to bolster US silicon manufacturing in order to reduce our dependence on China and Taiwan.

Also, back in June a Chinese economist who works for a government-funded think tank said a takeover of Taiwan would be necessary if the US and the West imposed sanctions on China as they have against Russia. She also added that TSMC would be seized, according to TechSpot.

As of press time, Speaker Pelosi had just landed in Taipei despite Bejing’s saber rattling. The Washington Post reported Hua Chunying, a spokeswoman for the Chinese Foreign Ministry, had accused the US of escalating tensions. She also warned of “disastrous consequences” if the situation was mishandled. In response, National Security Council spokesman John Kirby sought to lower the temperature by stating US policy toward Taiwan remains unchanged.

“Nothing has changed — nothing has changed — about our Taiwan policy,” Kirby said.

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