This week saw US House Speaker Nancy Pelosi visit Taiwan. She is the highest level US government official to visit Taiwan in 25 years. The subsequent reaction by China, including ongoing island encircling live fire military exercises(opens in new tab), threatens an already precarious geopolitical situation.
Taiwan-based Taiwan Semiconductor Manufacturing Company (TSMC) is Asia's most valuable company. It makes many of the chips we talk about at PC Gamer, including the CPUs and GPUs in our PCs, and the chips in our phones. Given the importance of TSMC, not just to the global technology industry but to the global economy itself, these latest tensions threaten nothing less than disaster. And that's all before considering the humanitarian, political, and military consequences of a Chinese invasion.
TSMC chairman Mark Liu was interviewed by CNN’s Fareed Zakaria(opens in new tab). When asked if TSMC was a deterrent or a catalyst to a possible war, Lui said: «Nobody can control TSMC by force. If you take a military force or invasion, you will render TSMC factory not operable. Because this is such a sophisticated manufacturing facility, it depends on real-time connection with the outside world, with Europe, with Japan, with US, from materials to chemicals to spare parts to engineering software and diagnosis.»
Major companies like Apple, AMD, Nvidia, Qualcomm, and even Intel rely on TSMC for chip production. If production were to cease, the supply of many of these products would dramatically shrink. That alone wouldn't be catastrophic, but the effect on the stocks of big blue-chip companies would take a beating and it would all snowball from there. We'd get a stock market crash, financial system stress, a global recession,
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