Beyond Chips: Will the U.S. Still Defend Taiwan?

Semiconductors are the backbone of modern electronics, with Taiwan playing a central role in global chip production. Taiwan Semiconductor Manufacturing Company (TSMC) dominates 60% of the world’s advanced microchip production and TSMC’s unmatched expertise in advanced chip fabrication gives it a 90% stronghold over cutting-edge semiconductors, from 7nm (Nanometer) to 3nm, powering everything from Artificial Intelligence (AI) and military tech to consumer electronics (Arcuri & Lu, 2022., The Economist, 2023, March 6). This dominance cements its role as an indispensable partner for U.S. tech giants like Apple, Google, and Nvidia (Arcuri & Lu, 2022).

TSMC was founded in 1987 in Hsinchu, Taiwan, by Morris Chang as a pure-play foundry, focusing on chip manufacturing rather than design (Arcuri & Lu, 2022). This business model helped popularise the fabless approach, where companies like Intel and Texas Instruments design chips but outsource production to specialised foundries in Asia (Arcuri & Lu, 2022). With rising geopolitical tensions, Taiwan’s semiconductor dominance presents an economic advantage and a strategic vulnerability, particularly in the Indo-Pacific.

Taiwan’s stability is critical in securing global tech and semiconductor supply chains, with TSMC at the heart of semiconductor manufacturing. Taiwan’s continued growth and dominance in the sector, tensions in mainland China are growing, especially since the election of current Taiwanese President Tsai Ing-Wen in 2016, who firmly rejects forced unification, emphasising Taiwan’s democratic identity (Arcuri & Lu, 2022). Meanwhile, Beijing sees unification as inevitable, with Xi Jinping warning in 2019 that Taiwan “must and will” be reunited, taking military action on the table if necessary (Arcuri & Lu, 2022). This ongoing power struggle fuels broader geopolitical tensions, with Taiwan’s semiconductor dominance raising the stakes and posing serious risks to the supply chain's resilience.

With an overall investment budget of $52.7 billion, the CHIPS and Science Act aims to strengthen domestic semiconductor manufacturing (Kannan & Feldgiose, 2022). In an attempt to reduce dependence on Taiwanese high-end chips and reshore the manufacturing of advanced microchips, the Biden administration and TSMC announced a US$6.6 billion investment in direct funding under the CHIPS and Science Act to support the construction of a TSMC plant in Arizona in 2022 (White House, 2022., Taiwan Semiconductor Manufacturing Company, n.d.).

Besides Arizona, TSMC is expanding globally through an investment plant in Kumamoto, Japan, under the Japan Advanced Semiconductor Manufacturing (JASM) joint venture (Staples, 2025). Supported by over $6 billion in Japanese government subsidies, the first facility began mass production in late 2024, focusing on 12-28nm chips for automotive and consumer electronics. A second fab, expected to be operational by 2027, will produce more advanced 6nm chips (KYODO NEWS, 2024). This investment strengthens Japan’s semiconductor supply chain while strategically reducing reliance on Taiwan amid rising geopolitical uncertainties.

As the U.S. pushes to cut dependence on Taiwan’s semiconductor industry and strengthen domestic production, a pressing question emerges; “if Washington no longer relies on Taiwan for chips, will it still have the same strategic urgency to defend the island against a potential Chinese amphibious assault?”.

If the U.S. no longer relies on Taiwan for semiconductors, Beijing may see an opening to reassess its strategic approach, weighing the risks and rewards of a bold move on Taiwan. Beijing has already escalated military activities in the Taiwan Strait, some of its most recent actions occurring after U.S. House then-speaker Nancy Pelosi’s visit to Taiwan in August 2022; China responded with large-scale military drills, simulating a blockade and launching multiple ballistic missiles over Taipei (Bellocchi, 2023).

These exercises included naval deployments, live-fire drills, and increased air sorties, signalling a sharp escalation in Beijing’s military posture toward Taiwan (Bellocchi, 2023). In April 2023, the PLA continued this escalation with the "Joint Sword" exercises, conducting large-scale air and naval drills around Taiwan. Unlike previous exercises, no exclusion zones were declared, demonstrating a change in China's strategic approach in the Taiwan Strait (Lin et al., 2023).

China recently held “live-fire training” near Taiwan’s southwest coast, deploying 32 military aircraft, with 22 entering Taiwan’s airspace (Chang & Gan, 2025). Taiwan condemned the drills as a provocation and a threat to international security (Chang & Gan, 2025). Meanwhile, a top Chinese official called for stronger reunification efforts, underscoring Beijing’s growing pressure on Taiwan (Kapoor, 2025). A Chinese takeover could grant Beijing access to TSMC’s advanced chip-making technology without the need to build it from scratch. This would accelerate China’s semiconductor ambitions and reduce its reliance on foreign tech, strengthening its position in the ongoing U.S.-China tech war.

Former U.S. National Security Advisor Robert O’Brien stated that TSMC’s fabs would be “blown up” if China invaded, revealing Washington’s willingness to sacrifice Taiwan’s lifeline to block Beijing’s rise (Dangwal, 2023., Tyson, 2024). But Taipei rejects this scorched-earth thinking (Everington, 2023). Taiwan’s Defense Minister Chiu Kuo-cheng dismissed the idea, making it clear that TSMC is not a bargaining chip but the backbone of Taiwan’s economy and security (Everington, 2023). While Washington sees the chip war as a zero-sum game, Taipei knows destruction is self-sabotage, not strategy.

Why the U.S. Might Still Defend Taiwan

As the U.S. reduces reliance on Taiwan’s semiconductors, its defence strategy remains driven by geopolitical imperatives, Indo-Pacific stability, and allied trust. Taiwan’s fall would shift the regional power balance and weaken U.S. credibility with Japan, South Korea, and the Philippines.

Taiwan is more than just a flashpoint in the U.S.-China tensions; it is a strategic linchpin in the Indo-Pacific. If Taiwan falls under Beijing’s control, the balance of power shifts decisively in China’s favour, making it far easier for the PLA to project military force deep into the Pacific (Sacks, 2023). The U.S. military’s operational freedom would be severely restricted, complicating efforts to defend key allies like Japan and the Philippines in the Indo-Pacific (Sacks, 2023). Taiwan is not just an isolated issue, it is central to Washington’s ability to maintain regional stability.

Beyond security concerns, Taiwan sits at the heart of global trade. The Taiwan Strait is a critical maritime corridor that links major economies across the Indian and Pacific Oceans, facilitating over $5.5 trillion in trade annually (Nagy, 2024). Control over these routes would give Beijing leverage over global supply chains, creating economic risks that extend far beyond Asia (Funaiole et al., 2024). The Malacca Strait, Bashi Channel, and Yonaguni Strait, all crucial chokepoints, would be vulnerable to Chinese dominance, threatening the economic security of the U.S. and its allies (Scott, 2022). There is also a broader ideological dimension.

Taiwan stands as a democratic counterpoint to China’s authoritarianism. Abandoning Taiwan would send a signal that Washington is willing to let autocracies rewrite the rules of the international order (Cunningham, 2024). It would embolden authoritarian regimes, weaken U.S. credibility, and undermine its long-standing commitment to democracy and human rights (Cunningham, 2024). For the U.S., defending Taiwan is not just about protecting an island; it’s about securing the Indo-Pacific, safeguarding global trade, and upholding the principles that define its foreign policy.

Conclusion

In my view, America will still defend Taiwan’s de-facto independent status because, while semiconductor self-sufficiency may reduce economic dependency, it does not erase Taiwan’s strategic significance. Taiwan is more than just microchips; it is a linchpin of Indo-Pacific security. The risk of conflict remains, and Taiwan will continue to be a core U.S. interest, not just for its technological edge but for its role in shaping the regional balance of power.

Even if semiconductor dominance fades, the U.S. military presence in Okinawa and across Japan cements Washington’s role in securing the region. The largest concentration of U.S. military bases outside its homeland is no coincidence but it is a message. Abandoning Taiwan would unravel decades of strategic positioning, embolden Beijing, and shake the confidence of allies like Japan, South Korea, and the Philippines. A retreat wouldn’t just weaken deterrence; it would accelerate China’s rise while crippling U.S. influence in ways that may never be undone.

Taiwan’s significance isn’t just military or economic but it’s ideological. It is a thriving democracy standing defiantly in the shadow of an authoritarian superpower. Letting Taiwan fall wouldn’t just mean losing an ally; it would signal to the world that America no longer stands by those who share its values. That isn’t just a diplomatic failure: it will be an open invitation for authoritarian regimes to rewrite the global order. Taiwan is the test. The cost of defending it is high, but the cost of losing it is far greater. If Washington steps back, Beijing steps in.

References

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