TAIPEI (Taiwan News) — A war between the US and China over Taiwan could inflict NT$332.55 trillion (US$10.6 trillion) in losses in the first year alone and erase 9.6% of global GDP, according to Bloomberg Economics.

The media outlet said Tuesday the damage would exceed the impact of the COVID-19 pandemic or the global financial crisis in 2008.

It said Taiwan sits at the heart of the vulnerability, producing 62% of the world’s most advanced semiconductors that power everything from AI data centers and smartphones to cars and aircraft. TSMC alone generates about 70% of global foundry revenue, supplying firms such as Nvidia, Apple, and AMD.

Bloomberg outlined five scenarios ranging from a full-scale Chinese invasion that draws in US forces to an unlikely rapprochement between Taipei and Beijing. The war case envisions a collapse in US-China trade, 50% tariffs imposed by US allies on China, and severe disruptions to shipping in the Taiwan Strait.

Bloomberg projected Taiwan’s economy would shrink 40% due to direct damage in a war, based on recent conflicts. It forecast an 11% contraction for China and a 6.6% hit to the US, driven by chip shortages and supply chain disruptions for companies such as Apple and Nvidia.

Bloomberg estimated South Korea’s GDP could fall 23%, Japan’s 14.7%, the European Union’s 10.9%, and India’s 8%. It attributed the decline to semiconductor scarcity, trade sanctions, and disrupted maritime flows through the Taiwan Strait, a route it said handles more than one-fifth of global shipping.

Bloomberg described President Lai Ching-te (賴清德) as championing Taiwan’s distinct democratic identity while Chinese leader Xi Jinping grows more impatient for annexation. Meanwhile, China’s military modernization is said to have eroded the US’ once-decisive edge, tilting geography and logistics closer to Beijing’s favor.

Even a blockade short of invasion would cut global GDP 5.3% and Taiwan’s 12.5%, Bloomberg projected, as chip inventories dwindle within weeks and production halts in dependent industries. Heightened tensions without a full crisis could trim global output 0.3% through modest tariffs and trade frictions, marking the most probable near-term path amid escalating gray-zone tactics from China.

While all-out war remains unlikely for now — given invasion risks to China’s untested forces and uncertainty over US intervention — Bloomberg’s modeling underscored Taiwan’s dual role as a linchpin of global chipmaking and a geopolitical fault line.