Senior US officials have reportedly warned major tech firms including Apple, Nvidia, AMD, Qualcomm, and Intel that a potential China move against Taiwan could severely disrupt global semiconductor supply. Despite classified briefings warning of risks as early as 2027, companies have been slow to shift advanced chip production to the United States due to higher costs and supply chain complexity.

Why Taiwan Is So Critical

Taiwan produces roughly 90% of the world’s most advanced semiconductors, largely through TSMC.

A disruption — including a blockade or military conflict — could:

Paralyze global electronics production
Trigger massive GDP contractions
Disrupt defense, AI, automotive, and cloud industries

A 2022 report commissioned by the Semiconductor Industry Association warned that cutting off Taiwan’s chip supply could cause the worst economic crisis since the Great Depression, including:

11% drop in US GDP
16% contraction in China’s economy
Over $10 trillion in global losses (Bloomberg estimate)

US Policy Response: CHIPS Act & Tariff Pressure

Under President Joe Biden, Congress passed the CHIPS and Science Act, allocating $50 billion to boost domestic semiconductor manufacturing.

Later, President Donald Trump increased pressure through proposed semiconductor tariffs of up to 100% for companies not sourcing from US facilities.

These policies aimed to:

Reduce reliance on Taiwan
Strengthen national security
Rebuild domestic chip production

Industry Hesitation: The Cost Factor

Despite warnings, companies have been cautious.

Key challenge:

US-made chips cost over 25% more than Taiwanese production
Domestic manufacturing lacks complete packaging infrastructure
Supply chains remain globally interconnected

Although TSMC committed more than $50 billion to Arizona facilities, initial customer orders were slow. Intel and Samsung reportedly faced difficulty securing buyers for US-based output.

Recent Shifts

Following tariff threats:

Nvidia agreed to source more chips from TSMC’s Arizona plants
TSMC increased US investment by $100 billion
Taiwanese firms pledged $150 billion in US investments
Additional $250 billion in credit guarantees were announced

Even with roughly $200 billion in semiconductor investments, US global market share is projected to reach only around 10% by 2030.

Key Entities

Apple – Major US tech company
Nvidia – AI chip leader
AMD – Chip designer
Qualcomm – Mobile chip maker
Intel – US chip manufacturer
TSMC – World’s leading advanced chip producer
Taiwan – Semiconductor hub
China – Strategic rival
United States – Domestic manufacturing push
Joe Biden – CHIPS Act administration
Donald Trump – Tariff escalation

Final Verdict

US policymakers view Taiwan’s semiconductor dominance as a major strategic vulnerability. While billions have been committed to reshoring chip production, industry economics and supply chain realities are slowing the transition.

Even with aggressive investment and tariff pressure, full supply chain independence remains years away. For now, Taiwan remains central to global semiconductor stability — and any disruption could have historic economic consequences.