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Can Taiwan's Silicon Shield Protect It against China's Aggression?

Joyce Huang

   TAIPEI - The global shortage of semiconductors, or microchips -- the
   "brains" in all electronic devices, has heightened the geopolitical
   significance of Taiwan and its chip-making sector. The island is home
   to the world's largest contract chipmaker: Taiwan Semiconductor
   Manufacturing Co (TSMC).

   Many describe Taiwan's strength in microchips as its "silicon shield,"
   which can protect it against Chinese aggression.

   But others suspect the sector, coveted by China, may also trigger China
   to accelerate its efforts to take advantage of Taiwan's tech prowess.

   'Not let war happen'

   When asked to explain the shield, TSMC chairman Mark Liu told CBS News'
   "60 Minutes" program last week that it means "the world all needs
   Taiwan's high-tech industry support. So, they will not let the war
   happen in this region because it goes against interest of every country
   in the world."

   While refusing to comment on whether the industry will keep Taiwan
   safe, Liu added that he hoped no war would occur in Taiwan. It is
   widely believed that any war fought in Taiwan could disrupt the global
   supply chains of microchips.

   More than 1 trillion chips are currently being produced annually.
   Industry watchers, including the National Bank of Canada estimated
   earlier that TSMC alone accounts for one-fifth of the world's chip
   production and up to 90% of the supply of the most advanced chips.

   In an "extremely hypothetical scenario," such a disruption in Taiwan's
   chip production could cause $490 billion in annual losses for
   electronic device makers worldwide, according to estimates by the
   U.S.-based Semiconductor Industry Association last month.

   All shut down

   American tech giants including Apple, major European auto makers and
   even Chinese companies would have to halt production in the event of a
   TSMC collapse, said Frank Huang, chairman of Taiwan's third-largest
   chipmaker Powerchip Semiconductor Manufacturing Corp.

   That, he said, will make China think twice about using force against
   Taiwan, the self-ruled island Beijing views as a renegade province.