A hundred miles of typhoon-swept sea off China’s southeast coast, a chain of colossal factories in Taiwan churn out the most important electronic devices on Earth.
The tiny, intricate chips that power phones, computers, cars, satellites, and just about everything else with a power source are at the core of the economic contest between the United States and China, a rivalry that is shaping the future of technology around the world.
The issue arose in the context of House Speaker Nancy Pelosi’s visit to the Democratic island on Wednesday, while speaking with the director of one of the biggest players in chips, Taiwan Semiconductor Manufacturing Company.
Today’s cutting-edge chips are mostly made in Taiwan, where the two powers are embroiled in a geopolitical tug-of-war over the island’s future. In Washington, Beijing and Taipei, diplomatic and military calculations are intertwined with concerns about supply chains without which the modern world could grind to a halt.
The United States wants to safeguard its leadership in semiconductors, a technology pioneered by Americans in the last century and incorporated into the industry that gave Silicon Valley its name. China desperately wants to catch up, both to help move its economy away from low-end manufacturing and to improve its military capabilities.
Tech companies on both sides of the Pacific rely heavily on Taiwan Semiconductor Manufacturing Company, the island’s largest silicon foundry, to make the high-performance chips that power video game graphics and give smartphones their intelligence. . They also guide missiles and analyze oceans of military data. That has made TSMC, whose name is unknown to most consumers, a vital strategic asset for both Washington and Beijing.
Taiwanese leaders have maneuvered for decades in the narrow space between American and Chinese interests. Now, they face an even more precarious balancing act.
Many Taiwanese companies, including TSMC, depend on China for their livelihoods, even if they support the island’s president to confront Beijing’s pugilistic behavior. While TSMC is working on a new plant in Arizona, the company is also expanding its facilities in Nanjing, China.
As a way of trying to counter China, Congress recently passed a $280 billion bill designed to bolster America’s manufacturing and technological advantage, particularly the semiconductor industry. Ms. Pelosi, after meeting with the Taiwanese president on Wednesday, also said that she was hopeful of a trade pact with Taiwan.
Dieter Ernst, a senior fellow at the Center for International Governance Innovation who studies the semiconductor industry, said of Taiwan’s leaders: “Right now, they’re moving a lot toward the US.” But from the perspective of the Taiwanese economy and most Taiwanese companies, he said, “they need to maintain a link, and hopefully as close a link as possible, with China.”
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