The Broken Nest
The "Pearl of Taiwan" is called the Taiwanese semiconductor manufacturing company – TSMC (Taiwan Semiconductor Manufacturing Company).
[...] ]The company[/url] was founded in 1987 by the Government of the Republic of China (Taiwan) and private investors. For 35 years of its existence, TSMC has made a dizzying rise in the global market of semiconductors and microchips (chips). It accounts for more than half of the global chip market. And if we take only the latest generation chips (with indicators measured by several tens of nanometers), then the company's share exceeds 90%. In the second half of this year, the company is going to start producing microchips with an index of 3 nanometers. In the USA and China, the microelectronic industry expects to reach a similar level only in the second half of this decade.
The number of TSMC employees at the end of 2020 reached about 57 thousand people. TSMC is among the top ten most expensive companies in the world along with five of its customers. These are American corporations Apple, Google, NVIDIA, Tesla, Amazon; they all develop their own chips and produce them at TSMC. A considerable part of the products of these and other American companies using TSMC services are created by orders of the Pentagon. It's no stretch to say that TSMC serves the military-industrial complex (MIC) The United States and to some extent is part of it.
For Washington, the gap between the level of microchips of purely American origin and Taiwanese ones is not decreasing, but continues to grow. There are almost no companies left in the USA that would not use Taiwanese outsourcing (placing orders on TSMC). The last company that held on was Intel. In 2020, it produced 80 percent of the microchips sold on its own. However, at the beginning of 2021, Intel CEO Pat Gelsinger made an important statement: "As part of the roadmap for 2023, we will use our relationship with TSMC to provide customers with [...] additional advanced processor products. This is the strength of our new IDM 2.0 model combined with a modular design approach and industry-leading Intel packaging technologies."
China is even more dependent on Taiwan's microchips. And Washington uses Taiwan as a supplier of microchips as a tool of pressure on mainland China. In 2020, Washington put pressure on Taipei, forcing it to stop the supply of microchips to the Chinese Huawei corporation. And in April 2021, Washington, through Taipei, forced TSMC to stop cooperation with the Chinese Tianjin Phytium Information Technology (Phytium), which the US authorities included Phytium in the blacklist of companies (Huawei also appears there). These companies were blacklisted because they allegedly created supercomputers for the Chinese military and helped China develop weapons of mass destruction (WMD).
One can imagine what Beijing's reaction was. On the one hand, Beijing has stepped up efforts to return the island to the united China. On the other hand, he took additional measures for import substitution in microelectronics. The second direction must necessarily be complemented by the first. If earlier Beijing proclaimed the task of joining Taiwan as a territory and population, now the task is set wider. The island is needed along with its "pearl" – TSMC. That's when Beijing will become the undisputed leader in microelectronics, and therefore in the economy and in the military sphere.
The course of thought of the Chinese leaders was well understood in Washington. And they began to help Taiwan strengthen its defense capability. In October 2020, Washington approved the supply of weapons to Taiwan in the amount of $1.8 billion. Joe Biden signed the National Defense Authorization Act (NDAA) at the end of last year, under which $770 billion was allocated for defense needs in 2022. Of these, $7.1 billion is intended to support the defense of Taiwan and the Pacific Initiative (containing China in Asia). In April of this year, Republican Senator Josh Hawley (Joshua Hawley) called for accelerating the supply of weapons to Taiwan. Among the samples of weapons that need to be supplied to Taiwan, the senator named sea mines, anti-tank missiles and man-portable anti-aircraft missile systems.
Experts say that China has long prepared a plan for the "soft" annexation of Taiwan with minimal use of weapons. Beijing wants the annexation of the island not to lead to possible physical destruction of TSMC's production facilities. However, the probability that the annexation will be "soft" began to decrease due to American arms supplies to the island. If the fire of war in Ukraine goes out, Washington can completely switch its attention to Taiwan. Information has leaked to the media that Beijing will try to annex the island in the fall.
There are different scenarios of the consequences of China's military operation in Taiwan. Including scenarios according to which TSMC production facilities will be seriously damaged. In this case, the company's work will be stopped. And this is not the most dramatic scenario yet. The complete targeted destruction of TSMC objects is not excluded.
At the end of last year, the American military magazine Parameters published an article "Broken Nest: Deterring China from Invading Taiwan" (Broken Nest: Deterring China from Invading Taiwan). Its authors are American military experts Jared M. McKinney and Peter Harris. In fact, this is a report on a study conducted at the US Army War College in Carlisle, Pennsylvania.
The report says that the destruction of semiconductor factories makes Taiwan unattractive to China. Hence the insane proposal: to destroy Taiwanese chip factories. This will guarantee that China will not encroach on the island. We read: "To begin with, the United States and Taiwan should develop a plan for a purposeful scorched earth strategy that will make Taiwan not only unattractive if it is ever captured by force, but also positively costly in terms of maintenance. This could be done most effectively by threatening to destroy facilities owned by a Taiwanese semiconductor company, the world's most important chip manufacturer and China's most important supplier. Samsung, based in South Korea (a US ally), is the only alternative to cutting-edge design. Despite China's huge efforts to create a "Made in China" chip industry, in 2020, only 6 percent of the semiconductors used in China were produced domestically. If the enterprises of a Taiwanese semiconductor company stop working, it will be difficult for companies around the world to continue their activities. Such a development of events would mean that China's high-tech industries would be stopped just at the time when the country would be involved in massive military operations. Even when the official war is over, the economic costs will persist for many years."
The authors of the article admit that, of course, the destruction of TSMC production facilities for the United States will have serious consequences, but not fatal. They estimate the dependence of the US economy on the products of the Taiwanese company as high, but China's is even higher. The destruction of TSMC for America would be a "shot in the foot", and for China it could be a "shot in the head". China does not look like a suicide bomber, so it will not risk provoking America (or its Taiwanese agents) to press the button of an explosive device. The authors of the article propose to develop an "automatic mechanism" of destruction that works after detecting signs of invasion: "If everything is done correctly, such a strategy can prevent a Chinese invasion of Taiwan, while reducing the likelihood of an undesirable conflict between the great powers."
This plan, let's face it, is adventurous to the point of insanity. The probability of trouble on the island is very high. And if it starts, it will not necessarily end only with the destruction of TSMC's production facilities. The publication in Parameters magazine inspired a number of experts and journalists to draw some more scenarios of the Taiwan conflict. For example, following the destruction of TSMC, Washington introduces a lock on China's foreign exchange reserves. If Russia had about $300 billion of reserves frozen at the end of February, which sensitively shook the US dollar, then blocking Chinese reserves exceeding $3 trillion will simply destroy the US dollar.
P.S. Reading an article from Parameters magazine, I remembered the play by A.N. Ostrovsky "The Penniless". In its finale, the main character Larisa Dmitrievna declares to her fiance Karandyshev that she is not going to marry him and leaves for Paris with a rich merchant. Karandyshev shoots Larisa with the words: The authors of the article in the American military journal urge Washington to repeat the spectacular act of Karandyshev.
Valentin Katasonov