TAIPEI (Taiwan News) — US officials warned that if China cuts off Taiwan’s chip exports, Washington’s economy could face catastrophic disruption, The New York Times reported Tuesday.
Federal officials have warned Silicon Valley about its dependence on Taiwan, which produces 90% of the world’s high-end chips. Executives from Apple, AMD, and Qualcomm have been briefed in Washington and Silicon Valley about the risks, including a potential Chinese blockade.
Presidents Joe Biden and Donald Trump tried to reduce reliance on Taiwanese chips. Biden offered billions in grants to boost domestic production, while Trump threatened tariffs to achieve similar goals. Yet the US tech industry has largely resisted shifting supply away from Taiwan.
Treasury Secretary Scott Bessent warned at the 2025 World Economic Forum that Taiwan is a “single point of failure” for the global economy. If the country’s production were blocked, he said, the resulting disruption would be catastrophic.
A confidential 2022 report by the Semiconductor Industry Association predicted that losing Taiwan’s chips would cause the largest US economic crisis since the Great Depression, slashing US output by 11% and China’s by 16%. Even major tech firms would operate only for months before critical supply chains collapsed.
The risk has forced Washington to rethink Taiwan’s strategic value. Beyond geopolitics and democracy, Taiwan is now central to US economic stability, especially as AI and other technologies rely on its chips.
Trump’s administration pressured companies to buy US-made chips. Nvidia committed to sourcing from new Arizona plants built by TSMC, the world’s leading chipmaker. Federal intervention was deemed necessary because new plants would not be viable without guaranteed buyers, and US-made chips cost 25% more than Taiwan’s.
Chips Act subsidies under Biden and continued commitments under Trump aimed to increase domestic production. TSMC, Intel, and Samsung pledged billions to build US facilities, potentially giving the US 20% of global advanced chip capacity by 2030, though companies remained hesitant to buy higher-cost chips.
White House briefings in 2022 and 2023 highlighted the urgency. Intel, Apple, Nvidia, and Qualcomm executives were warned that China could act by 2027. Russia’s invasion of Ukraine reinforced concerns that autocratic governments might seize territory even at economic cost.
Intel struggled with falling sales, leadership changes, and legal controversies. The government intervened, arranging investments from TSMC and Nvidia and securing US subsidies. Apple, AMD, and Qualcomm also committed to manufacturing more chips domestically.
US officials, including Commerce Secretary Howard Lutnick, used tariffs and negotiations to encourage Taiwan and TSMC to expand US production. TSMC agreed to build at least five new plants in Arizona, committing an additional NT$4.71 trillion (US$150 billion), while Taiwan provided NT$7.86 trillion in credit guarantees.
The efforts mark progress but illustrate the challenge: reshaping decades of global supply chains is slow. TSMC’s first US-made AI chip required final packaging in Taiwan, underscoring the interdependence that remains.
“We are unquestionably in a better position now than we were a few years ago,” Semiconductor Industry Association President and CEO John Neuffer said. “But this was never going to be solved overnight given the time it takes to get new chip manufacturing facilities up and running.”
