The U.S. and Silicon Valley may be running out of time to deal with Taiwan 

Over four decades, I have had the opportunity to consult with almost all of the major companies in the PC, consumer electronics, and telecommunications industries. In 1991, when the PC industry was barely a decade old, Acer’s founder Stan Shih invited me to tour the company’s new PC factory in Taiwan. What I saw wasn’t just a factory–it was the foundation of a new world order in technology manufacturing. 

Over the years, I’ve gained a deeper understanding of Taiwan’s crucial role in the global technology ecosystem. Semiconductor leaders like TSMC, along with manufacturing powerhouses such as Compal, Foxconn, Quanta, Pegatron, and Wistron, have built an ecosystem unmatched anywhere else in the world. This network has become the backbone of production for much of the world’s technology–supplying chips and devices for Apple, Nvidia, AMD, HP, Dell, and many others.  

Taiwan, an island about the size of Maryland just 90 miles off the Chinese mainland, produces roughly 90 percent of the world’s advanced semiconductors. Those chips power your iPhone, your laptop, your car, and even the massive data centers driving artificial intelligence. Without Taiwan’s fabrication facilities, the global technology industry does not just slow down–it stops. 

That the flow of Taiwanese chips could stop is more than a theoretical risk–it’s a crisis already in motion. China, which considers Taiwan a breakaway province to be reclaimed, could attempt to impose a naval blockade around the island. In fact, the China’s People’s Liberation Army recently conducted live-fire military exercises in the waters surrounding the island–a dramatic escalation of the drills that have become increasingly common since the last Taiwanese presidential election.  

These are not abstract war games; they are rehearsals for a naval blockade of the island, and everyone paying attention knows it. Colleagues in Taiwan who study such scenarios warn that even a rehearsal —with no missiles, no boots on the ground, just ships in the water—could choke off the world’s chip supply and cripple the American tech economy. And the chance that China might risk a blockade could increase while the U.S. is focusing its resources on Iran, they say. 

Treasury Secretary Scott Bessent spoke bluntly about the danger at the World Economic Forum in Davos last month. He called Taiwan’s concentration of advanced chip manufacturing “the single biggest point of failure” in the world economy and warned that a naval blockade or the destruction of the chip fabrication facilities would be “an economic apocalypse.” 

Two presidential administrations have tried to mitigate the risks posed by the Taiwan situation. President Biden deployed billions in federal grants under the CHIPS and Science Act to rebuild domestic semiconductor manufacturing. It was the right instinct, even if the results have been painfully slow to materialize. President The President has taken a harder line, imposing tariffs on certain Taiwan-manufactured chips as a way of encouraging the buildout of the U.S. chip manufacturing base. Carrots, then sticks. Neither has meaningfully moved the needle. 

Why? Taiwan Semiconductor Manufacturing Company, or TSMC, has spent decades building not just factories but an entire chip production ecosystem with specialized suppliers, fabrication engineers, and years of accumulated industrial knowledge. Nothing like it exists anywhere else on earth. Replicating that ecosystem on another continent, and achieving its scale and economics, is almost impossible, at least in the near term. It’s not like near-shoring a call center–it takes years, and tens of billions of dollars. 

The TSMC fabrication facility under construction in Arizona is a step in the right direction, but it is one plant, producing chips at a fraction of the volume Taiwan provides, and it won’t be fully operational for years. Intel’s chip manufacturing turnaround has seen major setbacks, including large fabrication business losses, customer doubts, and delays in winning new contracts. Samsung’s Texas expansion has faced delays, pushing the timeline for these factories going online to at least 2027-2028. 

I have watched Silicon Valley successfully navigate recessions, trade wars, and geopolitical upheavals. But nothing compares to the structural vulnerability the industry now faces regarding Taiwan and the global semiconductor supply chain. What makes the situation so frustrating—and so dangerous—is that the tech industry has had years to build resilience and has largely chosen not to (I began raising these concerns with two major semiconductor companies as early as 1999, and with all the major PC makers in the early 2000s). Apple, for example, moved a significant share of its phone manufacturing to India, yet its dependence on TSMC remains deep. 

The gap between the problem and the solution remains vast. If I were advising the boards of America’s major technology companies today, I would tell them this: The risk calculus has changed, and the window for an orderly, economically manageable shift to a more diversified supply chain is closing.  What’s left now is a race against a geopolitical clock that no company in Silicon Valley controls. The time to act is not after a blockade; it is now—before the scenario everyone prefers to dismiss as unlikely becomes the crisis no one is prepared to survive. 

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