Stuck in the Middle: Taiwan's Semiconductor Industry, the U.S.-China Tech Fight, and Cross-Strait Stability

Abstract

The Trump administration has worked to restrict the People's Republic of China's ability to manufacture and acquire semiconductor chips since 2018. Caught in the crossfire of this burgeoning tech war is Taiwan, which is home to Taiwan Semiconductor Manufacturing Company (TSMC), the world's largest semiconductor chip manufacturer. With the United States banning companies that use U.S. technology in their chip manufacturing process from doing business with Huawei, TSMC can no longer do business with the Chinese tech company, one of its most important clients. Until the Trump administration announced the license restriction on Huawei, TSMC had managed to walk the fine line of doing business with both China and the United States, without riling either. This article argues that the TSMC example is indicative of how great power competition between the two countries will play out for the foreseeable future. TSMC has announced that it will build a new factory in Arizona as it faces Chinese firms poaching its employees and Chinese actors hacking its systems and code for trade secrets—all actions demonstrating how great power competition will play out for tech dominance. Avoiding direct live-fire conflict, China and the United States will work to restrict the other's actions and development by forcing important tech companies, such as TSMC, into picking a side.