China would have to seize Taiwan to take control of TSMC if the United States and its allies impose sanctions against the Middle Kingdom like those currently in place against Russia, according to a prominent Chinese economist.
The move follows a suggestion last year by the United States that Taiwan should be prepared to destroy its semiconductor factories if China were to invade.
This latest development comes in a speech by Chen Wenling, chief economist of the China Center for International Economic Exchanges, delivered at the end of May at the China-United States Forum organized by the Chongyang Institute of Financial Studies of Renmin University of China. The text of the speech was published on the online news site Guancha (Observer).
In his speech, Chen began by saying that China and the United States should ease the hostile relations between them and that a confrontation between the two powers would be “a disaster for mankind”.
However, she then claimed that the United States was seeking to isolate China, citing the Trans-Pacific Partnership (TPP) and Transatlantic Trade and Investment Partnership (TTIP) agreements as attempts by the United States to create two large bodies. “anti-China” commercials. , although the United States withdrew from the first and the second was canceled due to disagreements.
Echoing many concerns in the West, Chen said China must take steps to secure its industrial chain and supply chain, and make strategic preparations to “cope with the US insistence on breaking the string and to contain it”, according to a translation. of text.
This means that if the United States and its allies imposed sanctions on China like those deployed against Russia, China “must reclaim Taiwan” and “seize TSMC, a company that was originally owned by China.”
Chen claimed that “they are accelerating the transfer to the United States and building six factories in the United States. We must not let all the purposes of the transfer be achieved”, a possible reference to the US CHIPS Act, which aims to encourage the construction of semiconductor manufacturing plants on US soil, which may include funding TSMC for the chip manufacturing facilities it is building in Arizona.
Although alarming, Chen’s speech seems to suggest that China should only take this action in retaliation for threats to its economic security, and there is no reason to believe that sanctions comparable to those against Russia are likely unless China is involved in a similar hostile act. against another country.
Any attempt by China to take over Taiwan and TSMC could be futile anyway, if the Taiwanese government adopts the scorched earth policy proposed last year in an article by an army war college. American.
This suggests that Taiwan’s best deterrent against potential Chinese aggression is to have a credible strategy in place to destroy its semiconductor manufacturing facilities should an invasion occur, thereby depriving China of the supply of many of its semiconductors. Besides TSMC, the island also has facilities owned by Chinese chipmaker Semiconductor Manufacturing International Company (SMIC).
Taiwan is considered vital by both the United States and China because it accounts for such a large part of the world’s semiconductor manufacturing capacity. Currently, the island has 48% of the global foundry market and 61% of the global capacity to manufacture chips using a 16nm or smaller process node.
This is especially true for China, which last year produced just one in six chips used by its industries, despite an ambitious goal to be 70% self-sufficient in semiconductors by 2025.
TSMC recently announced revenue of $17.6 billion for the first quarter of 2022, an increase of 36% compared to the same quarter a year ago. The company estimates that sales will continue to grow at a similar pace for the current quarter, based on the strong demand seen in the automotive and high-performance computing markets. ®