In brief: TSMC is once again warning of the problems both it and the semiconductor industry as a whole are facing as tensions between the US and China rise and the prospect of a Chinese invasion of Taiwan grows more likely.

TSMC, the world's largest contract chipmaker, is caught in the middle of the spat between the US and China, which accounted for 13% of the company's total revenue between April and June. That figure stood at 17% for the whole of 2020, but US sanctions against Chinese companies such as Huawei and the country's chip industry in general have impacted the amount of revenue TSMC generates from Chinese customers.

Speaking at the Taiwan Semiconductor Industry Association's annual convention (via Reuters), TSMC Chairman Mark Liu said: "The U.S.-China trade conflict and the escalation of cross-Strait tensions have brought more serious challenges to all industries, including the semiconductor industry."

Liu added that China's government has "never stopped promoting its domestic semiconductor industry," including chip design, manufacturing, and packaging.

Liu's speech comes a week after TSMC was granted a one-year license by the US to continue ordering American chipmaking equipment that will allow it to expand in China. TSMC will be able to ship the equipment to its Nanjing manufacturing facility in the country.

The latest US sanctions restrict shipments of American-made electronics or other items that China could use to create chipmaking tools or equipment. It also prevents non-Chinese companies in other countries from using American equipment to service Chinese customers unless granted a license by the US.

In addition to the US sanctions, China's semiconductor industry continues to suffer the effects of its strict Covid policies and a struggling economy. August marked the Asian nation's largest-ever monthly decline in the production of integrated circuits since records began in 1997.

There have long been fears that China could seize TSMC if it ever invaded Taiwan, a prospect suggested by a top Chinese economist earlier this year. There was even talk of the US destroying its facilities in such an event to keep them out of China's hands. But TSMC says this would be unnecessary given the company's reliance on overseas organizations and supplies for its operations.