TSMC is the Taiwan DPP’s gift to the US that keeps on giving

The island’s ‘silicon shield’ is being systematically taken down by Washington in preparation for a Ukraine-style proxy war

At about the same time as a 7.3 magnitude earthquake hit near Hualien, Taiwan, early this month, the world’s largest manufacturer of semiconductors announced it planned to produce its most advanced chips in the United States.

The new commitment by Taiwan Semiconductor Manufacturing Co (TSMC) means it aims to start producing its latest 2-nanometre chips, and more advanced ones in future, in a new plant to be set up in Phoenix, Arizona. The new plant goes significantly further than its current plant, which is also located in Arizona, that will produce less advanced but more commercial chips. TSMC is also offshoring more production to Japan and Germany.

The latest chips – each can cost more than a state-of-the-art BMW model – is crucial to the development of artificial intelligence. Previously, TSMC said it would confine the most advanced chip production to Taiwan.

That has sometimes been referred to as “the silicon shield”, the protection that the island is supposed to enjoy as a global chip-making hub to deter Beijing from invading and destroying the hi-tech manufacturing sector.

TSMC is not the only one offshoring. Other Taiwanese chip-making groups and hi-tech firms are “consider[ing] overseas headquarters to hedge against Chinese attack,” according to the Financial Times.

“Global efforts to secure supply chains put pressure on [Taiwanese] contractors to establish ‘alternative command system abroad’.”

Bloomberg, among others, was quick to link that development to the earthquake, with a story headlined, “Taiwan Earthquake Raises Stakes for Solution to Chip Dominance”.

The subtext is clear: the chip-making industry is too important to be left to Taiwan. Both natural disasters such as the latest quake and an invasion by mainland China could cause havoc to the global economy. Really? It’s not like people only now realise Taiwan lies within an active quake zone. That didn’t stop the island and its Western contractors from turning it into one giant chip-making foundry in the last few decades, a business that contributes up to 15 per cent of GDP. But under the ruling Democratic Progressive Party (DPP), the island is giving away its hi-tech jewel in the crown, TSMC, to Uncle Sam, while also leaving some leftovers to US allies such as Japan and Germany. In business, that resembles asset-stripping. In cross-strait geopolitics, it’s tantamount to taking down the silicon shield. But perhaps it’s all worth it, as the Taiwan government under the DPP is getting something very hi-tech from the US in return.

For the price of US$75 million, Taiwan will buy the Advanced Tactical Data Link System Upgrade Planning or Link 22.

“The proposed sale will improve the recipient’s ability to meet current and future threats by enhancing communications and network security, and providing infrastructure to allow the secure flow of tactical information,” the US Defence Security Cooperation Agency said in an official statement. Unlike Taiwan’s existing Link 16, Link 22 is, crucially, Nato-compatible, meaning the island’s military will be fully conversant electronically with the US military and its North Atlantic defence allies.

“Link-22 is a secure beyond-line-of-sight communications capability that interconnects air, surface, subsurface, and ground-based tactical data systems’,” the head of the Department of Strategic Planning Lee ShihChiang explained to lawmakers last year.

By constantly invoking the “China threat”, Nato has not been shy about expanding into

Asia, never mind its mandate explicitly spelled out even in its title.

While still referring to Link 16, an article from the US Naval Institute last year explains the military logic: “The US strategy must prioritise a multilateral kill chain … This would require access to the joint Link 16 architecture.”

Link 22 is, of course, technically far superior. The “first island chain defence”? Pentagon generals are now using far more graphic language – “transnational coalition kill chain”, and Taiwan is right in the thick of it.

Silicon shield out, US spear in. This is starting to look like Ukraine times 10.

"By constantly invoking the ‘China threat’, Nato has not been shy about expanding into Asia