A crisis over Taiwan would trigger a semiconductor supply shock far more damaging than the energy disruption currently roiling markets from the Hormuz closure. Eyck Freymann, a Hoover fellow at Stanford University and author of a forthcoming book on defending Taiwan, has warned that the world has no stockpile to cushion the blow - and that Taiwan itself might weaponize its chip production.

Freymann laid out the disparity in a Financial Times essay, "Hvylya" reports. Taiwan-based TSMC produces over 90 percent of the world's most advanced chips. "There is no strategic reserve of semiconductors, no equivalent of International Energy Agency members releasing 400mn barrels," he wrote. TSMC's fabrication plant in Arizona, he added, "cannot easily substitute for this lost supply."

If trade flows around Taiwan were physically disrupted, regional economies would face an energy shock far greater than today's. Taiwan, Japan and South Korea might find they could not buy energy cargoes on the secondary market at any price, with no one willing to deliver them. An array of global industries - from electronics to cars - would seize up simultaneously.

Freymann raised a scenario that turns the crisis into a double blow. Facing a blockade, Taiwan's government might ration energy allocation to industry - or deliberately curtail chip production to pressure the international community into ensuring the island gets resupplied. With energy-guzzling fabs running at reduced capacity or shut down entirely, a semiconductor supply shock would compound the economic pain and "could trigger panic in equity markets, particularly the US tech sector, risking rapid global financial contagion."

Beijing, Freymann argued, is preparing for exactly this kind of prolonged standoff. China has been building vast reserves of oil, chips, grain and a wide array of other commodities. "The purpose of building a shadow fortress economy is precisely so that it does not have to be used," he wrote. The strategy mirrors Iran's bet that an authoritarian regime with substantial stockpiles can outlast a coalition of democracies with smaller ones. A Taiwan crisis, Freymann concluded, "would not be so forgiving" as Hormuz.

Also read: Why China's limited oil reserves could constrain its ability to sustain a prolonged standoff with the US.