The fate of the global economy could be decided by one company.
The world's largest chipmaker is TSMC.
Tensions between the US and China could cost the global economy trillions.
One company on a tiny island off the coast of China makes a product used across the globe for a variety of household products.
Taiwan is worried about a potential standoff between the US and China. There could be trillions of dollars' worth of economic activity tied to that one company.
The fact that no other company makes such advanced chips at such a high volume could cause the global economy to suffer. The production of everything from cars to phones could stop if TSMC goes offline.
Glenn O'Donnell, the vice president and research director at Forrester, said that if China invaded Taiwan, it would be the biggest impact on the global economy. This could be larger than 1929.
You almost certainly own something powered by the chips of TSMC.
TSMC does not design its own chips but instead makes them for other companies at fabrication plants. According to some estimates, the company accounts for as much as 90 percent of the advanced processor market. SMIC's chip is about five years behind TSMC's, according to reports.
Apple is TSMC's largest customer, supplying the California tech giant with chips. According to The Wall Street Journal, most of the world's 1.4 billion smartphones are made by TSMC.
The company is valuable in the eyes of government entities because of their ability to process reams of data and guide missiles.
William Alan Reinsch is a senior advisor at the Center for Strategic and International Studies.
"When you have a very complex, very sophisticated, and very expensive technology where barriers to entry are very high, you can't just decide tomorrow, 'Well, I'm going to go into that business,'" he stated. It's not like drinking tea.
Much of the research and development of the Semiconductor industry is done in the United States. The US made technology is licensed by companies in other countries.
The Dutch company ASML produces high-end chipmaking equipment, but one of the technologies for which it's best known was invented in the US.
Over the past 30 years or so, manufacturers in developed countries decided that outsourcing the manufacturing of the chips was in their best interests.
He said that if you build a big factory and crank these things out by the thousands, you do it in a low- wage, non union country that doesn't have environmental requirements. It's where you make the money if you keep all the design and intellectual property at home.
This approach has led to the growth of chip foundries and reduced production in America.
The US produced almost 40% of the world's chip supply in 1990. The US accounts for only 12% of global chip production.
Having too much dependence on certain countries can cause supply chains to be disrupted. Many US corporations are looking at onshoring to make their supply chains more resistant.
Though Taiwan is self-governing, China claims the island as its own and has threatened to invade. The goal of achieving a "great rejuvenation of the Chinese nation" by 2049 is central to the goal of controlling Taiwan.
The consequences of an invasion could be significant, but many experts say it is just a matter of time before it happens. The US Secretary of State said on Monday that China could annex Taiwan sooner than previously thought. The US government is already playing out war-game scenarios to prepare for this, and in the event of a full invasion it would consider evacuate the skilled chipmaker engineers.
Since the US government imposed export regulations on China, the spotlight has been on Taiwan and the Semiconductor industry. China's ability to develop advanced technology is being curbed by those regulations.
A full-scale bilateral economic cold war between the US and China is likely to have severe financial repercussions.
The government of Taiwan has called the industry a "Silicon Shield" against invasion.
If China invaded, the global economy would come to a screeching halt. He said that Semiconductors have become the oxygen of the global economy. You cannot breathe without the chips.
The Center for a New American Security, a left-leaning think tank, has a security and technology expert who is a former senior intelligence officer at the CIA.
He told Insider that trillions of dollars in economic losses would be looked at.
The US commerce secretary said in July that the US would face a "deep and immediate recession" if American businesses were not allowed to use these chips.
In the event of an invasion, the chip-manufacturing facilities would be destroyed so China wouldn't be able to access them. The strategy was described as a broken nest in a US Army journal article.
Major national security implications could be caused by the destruction of those facilities.
He said that every military system that we rely on has a lot of chips in it. It would affect our ability to maintain our weapon systems.
The US has pledged to defend Taiwan in the event of a Chinese invasion.
It wouldn't necessarily take a Chinese invasion of Taiwan to block the world's chip access. China could institute a blockade on the island if it wanted to make investments in Taiwanese firms and steal their workers.
The US is trying to reduce its dependence on Taiwan. In July of this year, Congress passed the CHIPS Act, which included nearly $53 billion in subsidies and tax breaks in an effort to bolster chip manufacturing in the US.
Intel is building two $20 billion factories in Ohio, Micron is building a massive chip factory in New York, and TSMC is building a $12 billion plant in Arizona.
The less advanced chips needed in the auto industry will be produced in Japan by TSMC. According to the Wall Street Journal, Japanese officials want TSMC to expand its presence in Taiwan by adding capacity for advanced chips, a sign that global powers are becoming more cautious of the risks to Taiwan.
It would be foolish to celebrate an end to the chip shortage or the US's dependence on Taiwanese chips. Because of the chip shortage, the factories need equipment that is in short supply. Plants take a long time to build and get online.
He said that if you stick a shovel in the ground you won't get chips for three years.
There are still obstacles to decreasing the country's dependence on TSMC. Taiwan may still be the cheaper option for businesses despite the subsidies and tax breaks. TSMC's chips are likely to be better for the time being. Rasser said that the chips made in the US by Intel would not be as sophisticated as those made in Taiwan.
The US has a shortage of skilled workers needed to ramp up production, a problem that companies in this industry are facing across the globe. Enhancement of training and education will be needed to fill the gap.
The US may not be able to declare independence on the chipmaking front for years and possibly decades.
The CHIPS Act is a good step in the right direction, but it's just a little more than that.
The US might have to cross its fingers that a disruption doesn't happen.
Business Insider has an article on it.
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