Taiwan Dilemma of China: Semiconductor Chips and Military Options

While Ukraine war is so hot on ground and so distant from our concern because human beings are selfish creature, many analysts are asking the question when China is going to take over Taiwan. Nobody is asking whether it will take over because every one is sure that it will certainly take over at some point of time. In fact, some of Chinese Generals must be feeling that this is the right time before more sanctions come its way as it tries to help Russia more and more and exposes itself.

 

 

When this question is asked, another question automatically comes up, what will happen to TSMC, Taiwan Semiconductor Manufacturing Company. In 2021, it has been most valuable publicly traded company in Asia and one of top 10 publicly traded company in the world.

 

 

 

Hope you are getting into what it does. Entire world wants that this company should not be disturbed at all. The question frequently asked is, will China attack Taiwan just for TSMC and the answer is logical YES specially in short run.

 

If wishes were horses, it could have happened. Likely scenarios are different. How the events can unfold. China is expert in salami slicing. Can start to capture one of the islands around Taiwan to see the reaction of Taiwan and allied forces including USA. Pratas islands in between Taiwan and Hongkong is very likely target. This salami slicing will continue and if there is no strong response, may lead to naval blockade of Taiwan. Salami slicing can extend to naval or air blockade of Taiwan as well. Chinese civil aviation authorities are imposing flight restrictions on Taiwan on the pretext of some exercises which are continuous feature now. Why? There is strong evidence to suggest that older generation wants to avoid war at any cost while young generation will not accept Chinese dominance in Taiwan.

 

Let us talk of conventional warfare. Taiwan may be pulverised by air and artillery fire for a week or so, followed by amphibious assault or in conjunction with air war. Experts feel that China will be quite successful in knocking out Taiwan defence forces and infrastructure but amphibious assaults will make it very vulnerable for Taiwanese attacks. Probability is very unlikely. It will be more difficult for the Chinese if Taiwan goes Ukraine way. It may suffer heavy casualties and total international embarrassment. Decoupling from global economy will take place as sanctions will be imposed immediately. As it is China is facing sanctions on export of high technology chips from USA.

 

Next and relatively easy operation will be air and naval blockade of Taiwan which will be difficult to break by Taiwan without the active support of USA and Japan / AUKUS. Blockade busting operation will lead to full blown war. If the allies are not ready to help Taiwan, China can effectively cripple Taiwan defence forces without damaging the infrastructure. Read TSMC and other manufacturing facilities.

 

 

 

Let us assume for a minute that China would like to capture TSMC intact, will it work? I am sure TSMC has got the plan to cripple the physical infrastructure in that situation within no time. While USA will get the alternate supplies from Samsung or Intel, China will be lost. This is worrisome for China. TSMC gets inputs from USA, without that it will not be able to work. TSMC and USA are interlinked in working and drag Taiwan along.

China would love to have Taiwan with TSMC intact, if it has to set priority, TSMC and its functioning can be first military objective for China though it will work in short term only . China has already passed the anti-secession law; it means that it can use violent means to capture Taiwan.

 

In normal circumstances and conventional thinking is that Taiwan will fight a military battle to delay Chinese forces as late as possible so that USA and other forces can join the battle. Question is will they arrive on the scene in time ?

 

Let us revisit history and find out what happened during 1996 Taiwan strait crisis? USA forced Beijing to stand down with an aircraft carrier battlegroup sailing in Taiwan strait. This is not 1996 and military balance in Taiwan strait is in favour of PLA and it will keep on moving in that direction. US Ships are in range of Chinese Missile and so are the bases located at Guam and in Japan.

 

Let us assume for the time being that under relentless Chinese pressure, Taiwan gets ready to provide preferential treatment to China. TSMC is prepared to supply advanced chips to China, Huawei is provided preferential or equal treatment (Right now it is under sanctions). Will USA or Japan will accept that situation? It will go against US global position. I Phone chips are produced in TSMC and partial or full control of China on TSMC operations will not be acceptable to US and allies.

 

Taiwan produces worlds 11 % of memory chips and 37% of logic chips. Overall, 37 % of computing power will be lost if Taiwan suffers because of Chinese attacks. While Chinese are involved in assembling of various computers and electronic goods, they can be replaced easily, however it will be very difficult to replace TSMC and relocate it in other countries without a time consuming and deliberate operations. It will cost Trillions. Moreover, it will require so many companies from USA, Japan, Netherland, South Korea to join hands. No doubt world will be struggling to get washing machines, dishwasher, refrigerators, vehicles, aircraft etc along with so many of military applications during transitional time. Just to revisit the history, Morris Chang, TSMC founder thought of integration of Taiwanese and US economy to ward off the Chinese threat in the beginning only. His prophecy is coming true.

Taiwan President, TSAI Ing Wen too argued that Taiwan chip industry is a silicon shield for Taiwan but the fact that its concentration in Taiwan put global economy at risk. China’s investment in PLA is to ensure that this silicon shield does not work.

 

Ukraine war has shown that unthinkable can happen. Secondly economic and military power has no value if one cannot control chip making industry. Russia is facing difficulty today in fighting a hi-tech war because it outsourced chip manufacturing to TSMC. Precision guided munitions need chips and this is the reason why Russia is dependent on non-precision guided munitions. A simple Javelin anti-tank missile uses 200 semiconductor chips and Ukraine is using it so successfully.

 

Russia chip making industry is in doldrums due to sanctions which were imposed. TSMC and other suppliers took no time to cut off Kremlin from its supply Chain.

 

Chinese – USA match will not be one sided and that is the lesson China must have taken from this war. One can understand US bans on export of advanced chips to China just at the start of Ukraine war. China is investing heavily in Chip making. However, there should not be any doubt in CIA that China will attempt to capture TSMC intact at the start of campaign only. In the short run, it will help China but in the long run, it will lose its potential due to no supply from USA, after all it is Chip manufacturer only and not a designer. USA controls that.

 

So, what should be war objectives of PLA. Show of force to the extent that US and allied forces are deterred to counter Chinese attempts to blockade and strangulate Taiwan. Launch the military offensive but before that capture the TSMC intact through overt and covert means. I am sure Pentagon and CIA understands this game. So, all attempts are on to convince China that strong arm tactics will not work. Hope China listens to logic. Meanwhile India watches the development in Taiwan carefully along with USA, Japan, And AUKUS. It is a waiting game. Question is for how long?

 

(Inputs for the article have been taken from – Chip War by Chris Miller and various on-line sources)