How Taiwan’s computer chips are quietly shaping US geopolitics

<p>This means that China’s long-term goal of reunifying with Taiwan is now more threatening to US interests. In the 1971 Shanghai Communique and the 1979 Taiwan Relations Act, the US recognised that people in both mainland China and Taiwan believed that there was “One China” and that they both belonged to it. But for the US it is unthinkable that TSMC could one day be in territory controlled by Beijing.</p>

<h2>‘Tech war’</h2>

<p>For this reason, the US has been trying to attract TSMC to the US to increase domestic chip production capacity. In 2021, with the support of the Biden administration, the company bought a site in Arizona on which to build a US foundry. This is scheduled to be completed in 2024.</p>

<p>The US Congress has just passed the <a href=”https://www.bloomberg.com/opinion/articles/2022-08-01/chips-and-science-act-could-become-a-280-billion-boondoggle”>Chips and Science Act</a>, which provides US$52 billion (£43 billion) in subsidies to support semiconductor manufacturing in the US. But companies will only receive Chips Act funding if they agree not to manufacture advanced semiconductors for Chinese companies. </p>

<p>This means that TSMC and others may well have to choose between doing business in China and in the US because the cost of manufacturing in the US is deemed to be too high without government subsidies.</p>

<p>This is all part of a broader “tech war” between the US and China, in which the US is aiming to constrain China’s technological development and prevent it from exercising a global tech leadership role. </p>

<p>In 2020, the Trump administration imposed <a href=”https://www.dw.com/en/us-boosts-sanctions-for-china-tech-giant-huawei/a-54599763″>crushing sanctions</a> on the Chinese tech giant Huawei that were designed to cut the company off from TSMC, on which it was reliant for the production of high-end semiconductors needed for its 5G infrastructure business. </p>

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