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How America Should Support Taiwan

While US politicians have been increasingly vocal in their support for Taiwan in recent years, their political posturing threatens the delicate status quo that has enabled Taiwan to maintain its de facto sovereignty. If the US wants to help, it should stop undermining Taiwanese dominance in the semiconductor industry.

CHICAGO – The stern warnings issued by China ahead of Taiwanese President Tsai Ing-wen’s tour of the United States and Central America have highlighted the threat that intensifying Chinese pressure poses to the island’s security and stability. But the warnings also underscored the degree to which the ongoing US efforts to “on-shore” semiconductor manufacturing could cripple Taiwan’s economy at a critical time.

Taiwan’s security rests on two main pillars: self-governance and economic prosperity. Maintaining de facto sovereignty is non-negotiable, which rules out an accommodation that would placate China, at least under the current Chinese leadership. Even in the face of economic and diplomatic coercion, Taiwan is unlikely to relinquish its democratic system.

Taiwan’s dominance in semiconductor manufacturing is critical to its economic security. Taiwan currently produces over 60% of the world’s semiconductors and more than 90% of all high-end chips. But the current US efforts to promote domestic semiconductor manufacturing – reflected in the $280 billion CHIPS and Science Act – threatens to undermine the long-term competitiveness of the Taiwan Semiconductor Manufacturing Company (TSMC), severely threatening the island’s so-called Silicon Shield.