Taiwanese silicon shield in the face of the chip war

This thesis explores the strategic significance of Taiwan in the global semiconductor industry, particularly in the context of the intensifying US-China technological rivalry. Through the Taiwan Semiconductor Manufacturing Company (TSMC), Taiwan produces a significant portion of the world's semiconductors, including over 90% of the most advanced chips crucial for modern technology and military applications. The thesis argues that Taiwan's dominance in semiconductor manufacturing acts as a Silicon Shield, providing the island with a form of strategic protection against potential military aggression, especially from China, as any conflict would disrupt global supply chains and have severe economic repercussions. Using Dale Copeland’s Theory of Trade Expectations as a framework, the thesis argues that Taiwan’s dominance in semiconductor production, through TSMC, creates a complex interdependence with both the US and China which rely heavily on Taiwan for advanced chips, which are critical to their economies and national security. Copeland’s theory highlights that as long as both superpowers expect continued trade benefits from Taiwan, they are incentivised to maintain their security and avoid conflict. The thesis also examines the history and evolution of Taiwan's semiconductor industry, the challenges faced by China's efforts to achieve semiconductor self-sufficiency, and the strategic measures taken by the United States, including the CHIPS Act, to reduce its reliance on Taiwan while strengthening its domestic semiconductor industry. Ultimately, the thesis underscores the pivotal role of Taiwan in global geopolitics and the ongoing Chip War, where semiconductor technology is at the heart of economic and national security strategies.