"broken nest strategy for Taiwan" Topic

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I was aware of the Taiwanese dominance in chips, but I wonder whether such a "scorched earth" plan isn't conceding too much?

To start, the United States and Taiwan should lay plans for a targeted scorched-earth strategy that would render Taiwan not just unattractive if ever seized by force, but positively costly to maintain. This could be done most effectively by threatening to destroy facilities belonging to the Taiwan Semiconductor Manufacturing Company, the most important chipmaker in the world and China's most important supplier. Samsung based in South Korea (a US ally) is the only alternative for cutting-edge designs. Despite a huge Chinese effort for a "Made in China" chip industry, only 6 percent of semiconductors used in China were produced domestically in 2020.27 If Taiwan Semiconductor Manufacturing Company's facilities went offline, companies around the globe would find it difficult to continue operations.28 This development would mean China's high-tech industries would be immobilized at precisely the same time the nation was embroiled in a massive war effort.
Even when the formal war ended, the economic costs would persist for years.

I hope the US is taking steps to reproduce the Taiwanese capacity over here. Probably not.

Here's the original article.

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I would think we would want to fight them in the air and on the seas and on the landing grounds etc etc (thank you Winston) and then destroy the chip factory as a last ditch. But make very certain they know we can and would do that.

Excuse me professor, but I've got stupid question:
Would it benefit the Taiwanese to threaten to stop selling chips to China? Probably in a saber rattling way instead of an actual economic disaster way.

Hmmm. But iirc the Japanese decided to attack us after we stopped selling key items like steel to them.

Many people thought for a long time that because the north needed southern cotton so badly, civil war was unthinkable. (That was the basis for the CSA's disastrous King Cotton diplomacy.) It is logical, but non-economic factors may prevail.

It's an open question but I would tend to say that sort of threat would be dangerous to taiwan.

Someone is at least taking some steps to build US chip manufacture

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Excellent! Missed that.

Even better, the Senate just passed a 50 billion subsidy bill and both Samsung and Intel will be building new plants here as well. TSMC will build multiple plants and I believe it's production facilities here will eventually exceed those in Taiwan. Samsung is our South Korean supplier, Intel is a US maker. I think most of this is in Arizona, which the Chinese are not ready to invade. So yes the US has been thinking about it.

Good news.

Funny story: our church had, for decades, a trust fund that was first established in 1942 to rebuild in case the Japanese destroyed our building in Chattanooga. It was started and funded by several very wealthy members. After about 50 years -- and some really nice growth at compound interest -- the church's leaders agreed, and persuaded a court, that the risk had passed and the church might draw on the funds for other purposes.

Would it benefit the Taiwanese to threaten to stop selling chips to China? Probably in a saber rattling way instead of an actual economic disaster way.

Far better for them to say, 'oh, all our chip production has been pre-ordered for the next 3 months, so sorry -- we look forward to filling your orders next Quarter after we've worked through our current orders!'

SB, yes.

Sadly, American CEOs, board members, and other execs have pushed for overseas manufacturing, since it is/was cheaper, and they couldn't be bothered to make them at home. We used to do that.

Alas, with America poised to have the highest tax rate in the developed world, globally, I doubt that is a good recipe for domestic manufacturing.

If that weren't the case, I would suggest inviting Taiwanese manufacturers to move to the USA to avoid being seized by the Chinese government. Surely, that would be preferable to destroying their manufacturing capabilities totally in a scorched earth plan. However, given the realities of the above, perhaps they are better moving somewhere else instead.

I agree, cutting off the Chinese would be an excellent tactic from a practical standpoint, but is bound to make them hopping mad too, and more likely to increase their belligerence.

Thresher, TSMC is already here! They have broken ground, it's really happening. And our tax and effective tax rates are not the not the highest in the world. Especially with all our corporate subsidies and off shore accounts. This is just a great place to get rich. Unless you are poor.

And we do make stuff here, people forget that automation changed the manufacturing job market more than jobs going overseas. Every manufacturer has been automating for decades.

Sadly, American CEOs, board members, and other execs have pushed for overseas manufacturing, since it is/was cheaper, and they couldn't be bothered to make them at home. We used to do that.

Yep, that's because Congress did the old "we must act now!" thing in the 1970s. In response to global competition in the 1970s, Congress relaxed Anti-Trust regulations to promote easier mergers and consolidation -- the idea being that having 3 American companies merge into one company was better than losing all 3 American companies to those dang Japanese! This resulted in Merger Mania in the 1980s, decoupling corporate success from Stock Value/Shareholder Value.

This also led to Corporate leadership getting compensated with Stock instead of just a Salary, incentivizing the shift in Corporate culture away from the older model of Corporate Social Responsibility (Henry Ford) to one based on Shareholder Value (say, fictional Gordon Gecko as an example). So leadership is now materially decoupled from the success of their employees, which are a pain to deal with anyway -- so they leapt at the opportunity to offshore, reducing the need for more expensive US jobs and manufacturing sites, boosting the bottom line and their own stock value.

"And our tax and effective tax rates are not the not the highest in the world".

Not yet, but it WILL BE if the BBB plan gets approved, or portions of it. That has been all over the news, at least on the stations that still report that, and are not propaganda mills for the current administration.

Yes, we do produce some stuff here, including high-tech items, but most has been offshored and is produced overseas.

The TSMC chip factory, a 12 billion dollar facility, is already well under construction north of Phoenix. Its here. In the USA. Making chips soon.

And you have heard that Samsung, our supplier from South Korea, is also building here. As is Intel, the American company. All making chips, grabbing the recent 50 billion subsidy. Invasion-free Arizona. A critical market item, made right here in America. Not produced overseas.

"Invasion-free Arizona".

Ha, ha, ha!!!

Do you not follow the news and know what is going on at our Southern Border?

2 – 2.5+ MILLION coming across the border in the last 12 months, illegally, is NOT synonymous with "Invasion-free".

I guess they forgot their tanks and heavy weapons units. Will China be invading Taiwan with a million women and children? I suppose they could. It would not be easy to handle. I feel pretty sure you know what I meant in any case.

The Taiwan issue can be addressed in a number of ways, and its looking like the chips at some point will no longer be a critical consideration. Because, and I think I mentioned this, they will be making them here.

That's right, something good happening in America. Are we allowed to just mention something like that anymore? I hope so. For all of our problems, we have a lot going for us.

I hope the current POTUS' hostile anti-business policies don't derail the TSMC chip factory negotiated during the previous POTUS' pro-business policy environment designed to bring manufacturing back to the US.

The 50 billion was passed by the current Senate and they are 6 months into construction of the first facility. So, what could this mean? Maybe its not going to derail? That seems like a possible guess.

Can't we ever just leave it that its a good thing currently happening?

If I recall, the Keystone Pipeline was approved, budgeted and under construction when it got derailed. So I think it's a valid concern.

What evidence is there to document that POTUS would deliberately undo what is happening in Arizona? Do you see highly publicized international controversy around this, as we saw with Keystone? Can anybody acknowledge the positive impact of the chip factories without making it a former POTUS campaign attack ad? I think these chips are a key component of western interest and support for Taiwan. Is this related to the topic of this thread?

Are we talking about an important strategic development in assessing the threat of a military invasion by China of Taiwan? Would this be a true statement? Or do I just don't get it?

My statement was just to state that those projects that seem to be making progress can be stopped by the stroke of a pen by someone miles away. Pick your POTUS/supervisor/director/manager/leader: it's hard to do good things, it's really easy to screw stuff up.

Any manufacturing that can be brought back to the US is a good thing. See, we agree on some stuff.

Okay, good point. I get it!

Yes, and it is generally true that there is very little POTUS or any other politician can do to make an economy thrive -- but many many ways he can cripple it.

Again, I just don't see the PRC doing an actual invasion of Taiwan. But sooner or later, Taiwan will be back under the PRC's control. They are in it for the long game. The PRC, IIRC was only born in '49.