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In context: TSMC's chairman has warned that a Chinese invasion of Taiwan would result in the company's factories becoming inoperable, underlining the point that "Nobody can control TSMC by force." The rare interview with Mark Liu comes as tensions between the US and China reach an all-time high over House Speaker Pelosi's plans to visit Taiwan during her Asia tour. China said it would "not sit by idly" and threatened "forceful measures" if Pelosi does land in the country.
Liu shared his thoughts on a possible Chinese invasion in an interview with CNN's Fareed Zakaria. He said that, like all wars, there would be "no winners" if such a conflict did occur, with China, Taiwan, and the West all losing. Liu added that the scenario would have consequences beyond the semiconductor industry, resulting in the "destruction of the world's rules-based order."
Taiwan, tech, and the threat of Chinese attack: Part 1 of my conversation with TSMC Chairman Mark Liu, from today's GPS pic.twitter.com/xTGR1ovEoC— Fareed Zakaria (@FareedZakaria) July 31, 2022
In June, a high-ranking government economist said China should seize TSMC if the west ever imposed sanctions on the country like those faced by Russia. Liu believes taking TSMC by force would be impossible given the company's many moving parts and reliance on support from outside firms to operate. "[T]hese are such sophisticated manufacturing facilities, they depend on the real-time connection with the outside world... from materials, to chemicals, to spare parts, to engineering software, and diagnosis," the chairman explained.
Commerce Secretary Gina Raimondo recently warned that the US could face a deep recession if it were ever cut off from the Taiwanese chip manufacturing industry—one of the factors that prompted the CHIPS Act.
China also relies on TSMC for its chips, and Liu believes the country would face great economic turmoil if its most advanced component supply disappeared. Analysts believe China's fear of what a disrupted Taiwanese chip industry would do to its economy is a significant deterrent against any invasion plans—a so-called Silicon Shield. "If they [China] need us, it's not a bad thing," Liu added.
Liu concluded by saying that China, Taiwan, and the west need to look at how to avoid war in the region and ensure the engine of the world's economy continues humming.
According to the latest reports, the US Air Force jet that Pelosi flew on to Malaysia has taken off from Kuala Lumpur. While it's unclear if she is on the plane, the US Navy has simultaneously deployed four warships east of Taiwan, suggesting the House Speaker's visit could happen today.