Taiwan's leaders have long treated their chip industry as a guarantee of American protection. In 2021, then-President Tsai Ing-wen called it a "silicon shield," arguing in Foreign Affairs that U.S. reliance on Taiwanese semiconductors would guard the island against "aggressive attempts by authoritarian regimes to disrupt global supply chains." The Iran war has turned that logic upside down, The Atlantic's Simon Shuster has argued.
The analysis, reported by "Hvylya", draws a parallel with Iran's five-week blockade of the Strait of Hormuz. Tehran - far weaker than China - cut one-fifth of global oil supplies, spiked U.S. gas prices by 40 percent, and converted that economic pain into political leverage that forced Washington into a truce.
A blockade of Taiwan would inflict far greater damage. The island produces more than a third of the world's microchips, and cutting that supply would halt manufacturing of computers, cars, smartphones, and appliances worldwide. Building the data centers that power artificial intelligence - the engine of American economic growth - would become impossible without Taiwan's advanced chips.
Chris Miller, a Tufts University historian, estimated in his 2022 book Chip War that the economic damage would exceed the COVID pandemic's impact, with recovery taking five or more years. The total cost, he wrote, would run into the trillions.
Elon Musk is already working to close that gap: he announced a partnership with Intel to design and produce advanced chips at a facility Tesla recently purchased in Texas. But the new factory will take years to begin production, meaning the U.S. economy remains unprotected for now.
A CSIS report based on 26 war games concluded that any Chinese blockade would leave the American president with two options: accept Taiwan's surrender on Beijing's terms or send forces into a conflict where the U.S. Navy could lose hundreds of vessels. Retired Marine Colonel Mark Cancian, one of the report's authors, warned that even breaking through the blockade would constitute a major naval engagement with no guarantee of success.
"Hvylya" also analyzed why China's limited oil reserves and economic troubles may prevent Beijing from risking a direct clash with Washington.