Taiwan, TSMC, Semiconductors, and Security
The Relationship Between Semiconductors and Security Through the Lens of Chip War
Scene 1
In October 2022, the director of the CIA revealed that Chinese President Xi Jinping had instructed the People’s Liberation Army to complete preparations for an invasion of Taiwan by 2027. Could China ultimately launch an attack on Taiwan, much like the final scene of the HBO drama Years and Years (2019)?
Scene 2
As the U.S. accelerated its reshoring efforts in 2022 through the Inflation Reduction Act (IRA) and the CHIPS and Science Act, one book captured the world's attention: Chip War by Chris Miller. How did a scholar originally studying Russian economic history come to focus on semiconductors?
A Changing International Order
If one flips a map of the Korean Peninsula upside down, it becomes intuitively clear that Taiwan, South Korea, and Japan form a natural barrier preventing China’s expansion into the Pacific. During the Obama administration, U.S.-China competition played out beneath the surface. However, under the Trump and Biden administrations, the U.S. has made its containment of China increasingly explicit. Cutting-edge technology is no longer just a tool for economic progress—it has become a matter of national security. The U.S. is now applying broad pressure and restrictions against China across various sectors.
Unlike the post-World War II era, the U.S. no longer enjoys unchallenged superpower status. China has been rapidly closing the gap, both economically and militarily. Meanwhile, the U.S., having weathered multiple political and economic upheavals over the 20th and 21st centuries, can no longer project its resources across the globe with the same dominance as before. Instead, Washington seeks to maintain its version of international order through a coalition of allies, including the UK, Europe, Japan, Australia, and South Korea.
Why Taiwan?
Returning to Chip War, the book offers insights into how Washington perceives Taiwan, China, and South Korea. Chris Miller, a professor at Tufts University, vividly portrays America’s strategic thinking.
For the U.S., Taiwan is not just a crucial geopolitical asset in countering China—it is also vital in the realm of advanced technology. This is because Taiwan is home to TSMC, the world’s leading semiconductor foundry.
Why does TSMC matter? The U.S. played a pioneering role in the semiconductor industry during the 20th century, with Intel and Moore’s Law symbolizing American technological leadership. However, due to globalization and supply chain specialization, the U.S. now primarily focuses on semiconductor design, while manufacturing is largely outsourced—most notably to Taiwan's TSMC.
Tech giants like Apple, NVIDIA, and Qualcomm—some of the world’s biggest consumers of semiconductors—all depend on TSMC for production. While Samsung is the second-largest foundry, TSMC’s market share is more than double that of Samsung.
In short, Taiwan holds immense strategic value for the U.S. in its efforts to contain China, while TSMC is indispensable for maintaining America's technological dominance. China, however, has made clear its political and military ambitions to bring Taiwan under its control. If China were to invade Taiwan and seize control of TSMC’s facilities, it would deal a severe blow to the U.S. semiconductor supply chain. Alternatively, if China were to bomb TSMC’s plants, the world would face a catastrophic semiconductor shortage.
Why Are Chips So Important?
Chip War highlights that semiconductors are not just crucial because they power everyday electronics, but because they are integral to modern military systems, including missiles and defense technologies.
Chris Miller, who initially studied Russian economic history, argues that one of the key reasons the Soviet Union fell behind the U.S. was its failure to keep pace in the semiconductor industry.
The strategic importance of semiconductors became even more apparent during the Trump administration. With the rollout of 5G technology, the demand for telecom and server equipment surged. China’s Huawei aggressively marketed its products at low prices, but the U.S., UK, Australia, and other Five Eyes intelligence partners banned Chinese telecom equipment, citing concerns over security vulnerabilities and potential espionage. This episode underscored how semiconductor supply chains are deeply intertwined with national security and intelligence operations.
Since 2022, the U.S. has been actively promoting the Chip 4 alliance, a semiconductor coalition comprising the U.S., Japan, Taiwan, and South Korea. This effort has gained further momentum following the Washington Declaration, which has strengthened trilateral security cooperation between the U.S., South Korea, and Japan. If the U.S. leads in semiconductor design, South Korea dominates memory chips, Taiwan excels in foundry production, and Japan specializes in semiconductor materials and equipment, then their collaboration could create a highly resilient supply chain.
What About South Korea?
Chip War offers a glimpse into how the U.S. views Taiwan and South Korea in the semiconductor landscape. The book’s glossary section introduces key figures in the industry, including TSMC founder Morris Chang, but notably omits Samsung’s founder, Lee Byung-chul. Why?
From Washington’s perspective, Taiwan’s TSMC takes precedence because it manufactures chips for major American companies like Apple and NVIDIA. This is why TSMC is building a new foundry in Arizona, ensuring that chips critical to U.S. interests can be produced domestically in a secure environment.
While the U.S. remains a key ally, South Korea can no longer afford to rely solely on American support. Seoul must strategically define its national interests and navigate its relationships with agility. This requires a nuanced approach—leveraging diplomatic flexibility, maintaining multiple negotiation options, and using economic and technological assets as bargaining chips.
Currently, South Korea faces multiple challenges in the semiconductor sector. From the latter half of 2023, Samsung and SK Hynix will be restricted in upgrading their semiconductor facilities in China. Meanwhile, even as U.S. chipmaker Micron withdraws from the Chinese market, Washington is pressuring South Korea not to fill the gap. Additionally, the U.S. is demanding sensitive business data from Korean semiconductor firms, while expecting them to build foundries on American soil. These are pressing issues that require strategic countermeasures.
If South Korea, the U.S., and Japan deepen their cooperation, they could create a robust and secure semiconductor ecosystem. However, South Korea must ensure that its national interests are fully reflected in U.S. semiconductor policies. Diplomatic channels are already in motion, but moving forward, Seoul must demand tangible benefits that align with its investments in the U.S. semiconductor sector. While Washington argues that South Korea has already benefited from the CHIPS Act by gaining a competitive edge over China, Seoul must push for further strategic gains while mitigating potential risks.
The triangular relationship between semiconductors, South Korea, and national security is still unfolding. The world of chips is more than just business—it is geopolitics, power, and survival.
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