The strategic importance of Taiwan’s semiconductor industry has garnered greater attention during the Covid-19 pandemic, which poses significant challenges for global supply chains. China’s hostilities toward Taiwan, which in the last two years include frequent incursions into its air defense identification zone (ADIZ), also raise concerns over supply chain security. But would Taiwan risk the destruction of its chip industry to avoid an invasion?

The Taiwan Semiconductor Manufacturing Company (TSMC), recently highlighted by NPR’s Planet Money, remains the world’s largest producer of semiconductor chips, integral to nearly all modern electronics. This month President Tsai reiterated technological innovation like that in semiconductors as crucial to Taiwan’s security. The steep startup costs in such manufacturing has also left few competitors. For example, although China has invested heavily in domestic production as a means to reach technical self-sufficiency, these efforts lag considerably behind Taiwan and others in terms of producing cutting-edge semiconductors, requiring China still to rely on imports from Taiwan.

Meanwhile, the United States has responded to changing cross-strait conditions in two directions. First are efforts to boost its own domestic production, as evident in $52 billion in funds proposed for the semiconductor industry under the U.S. Innovation and Competition Act passed by the Senate in 2021. Second, the U.S. has acted to improve relations with Taiwan short of a formal change in the long-held policy of “strategic ambiguity” when it comes to Taiwan’s defense. Taiwan has been particularly effective at blurring the line between official and unofficial diplomatic relations, particularly with the United States.

Despite additional arms sales to Taiwan in areas crucial to the country’s defense (e.g. harpoon missile systems), it remains unclear to what extent the U.S. can deter Chinese aggression, especially with the rapid modernization of China’s military, specifically in the areas most needed for an invasion. Growing Chinese confidence in its abilities along with a recent Pentagon war game scenario that suggested the U.S. would fail to defend Taiwan further exacerbates concerns. Thus, coupled with concerns about the willingness of the U.S. to go “all in” compared to China’s interests in Taiwan as well as the U.S. potentially lacking the military superiority it has been accustomed to in recent military conflicts, Taiwan may need to consider novel ways to deter China separate from U.S. commitments.


Photo Credit: Reuters / TPG Images

A leaflet that asks employees to protect company confidentiality pictured at a TSMC reception in Hsinchu, Taiwan August 31, 2018.

With heightened cross-strait tensions in mind, Jared M. McKinney and Peter Harris in their recent paper in Parameters provide a unique suggestion on how Taiwan can deter a Chinese invasion and a broader U.S.-China war. They suggest a “scorched-earth” policy, entitled “Broken Nest,” in which Taiwan deliberately destroys TSMC. A TSMC sabotage operation would have such damning economic ramifications for China and others that in theory it could restrain China from moving beyond the typical bellicose unification rhetoric.

This admittedly is a novel approach, which unlike many of the suggestions elsewhere on how to secure Taiwan’s sovereignty does not ignore its defense capabilities. Nor does it simply reiterate concerns that Taiwan does not spend enough on defense. The approach would also deny China one of the clearest economic benefits of a successful invasion, access to Taiwan’s more advanced tech industries.

This approach, however, still relies on several assumptions that should worry all parties involved. First, the authors acknowledge that simply facing a military defeat may not be enough to deter a Chinese invasion. This certainly is exacerbated by echo chambers in both Chinese military circles and the Chinese public of the need for unification and China’s ability to secure this outcome. McKinney and Harris state their approach needs China to “believe conquering Taiwan…cannot be done without jeopardizing other core interests.” It is unclear to what extent Chinese officials might actually tolerate such an economically weakened Taiwan and its radiating effects on the region if this meant the realization of Taiwan’s de facto independence. From a rational cost-benefit calculation, the potential economic losses seem quite severe for China.

But if Chinese officials have attached an inflated symbolic value to unification as their statements may suggest, one buttressed by decades of rhetoric on the necessity of unification and public support for it, such economic costs may be viewed as acceptable short-term costs.

Second, such a “scorched-earth policy” creates several potential problems for Taiwan. Economic self-harm, even if successful in deterring China in the short-term, may only delay Chinese aggression until China can meet domestic semiconductor production goals. The destruction would also hollow out a key industry in Taiwan, one that would be very difficult to rebuild, with supply chain ramifications globally even as TMSC investments in the U.S. along with growing U.S. production capacity may blunt these effects. Thus, while Taiwan may be able to deter an invasion in the short-term, its ability to prepare for later efforts a decade or later may be severely weakened. Third, even under the specter of a Chinese invasion, it is unlikely that the Taiwanese public would view such a sabotage as in the country’s own interests. This is despite a Taiwanese public increasingly supportive of independence over unification and identifying more as Taiwanese than Chinese.

Deterring a Chinese invasion of Taiwan requires both creative unilateral efforts by Taiwan and coordinated efforts by supportive democracies. Nor do such efforts have to convince China that the window for unification has closed, a point McKinney and Harris acknowledge. Efforts that would grievously damage Taiwan’s economy and potentially only delay China’s coercive efforts do not serve Taiwan’s long-term security interests.

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TNL Editor: Bryan Chou, Nicholas Haggerty (@thenewslensintl)

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