Introduction

In the modern global era technological potential has taken a more central role in the concept of national power superseding conventional security measures and aspects of power. Semiconductors lie at the foundation of much of the power of the contemporary world, such as artificial intelligence and hypersonic weapons command systems. In this domain Taiwan has emerged as a key chokepoint in the world of technology, producing more than 65% of the world’s foundry production and more than 90% of the leading-edge capacity at around 2nm, primarily through the Taiwan Semiconductor Manufacturing Company (TSMC).

This exceptional capability places Taiwan and TSMC in particular in a singular form of strategic power that is a “silicon shield“. Taiwan’s ascent to semiconductor supremacy originated with a strategic decision that turned a peripheral economy into the world’s chip production center. The turning point was Morris Chang’s founding of TSMC in 1987, which brought the revolutionary “pure play foundry” model that broke chip design from manufacturing. This model revolutionized the world’s semiconductor economies. In contrast to conventional integrated device manufacturers (IDMs) such as Intel, which design and produce chips, TSMC focused on production, allowing fabless leaders such as Apple and AMD to outsource production while they innovated. This model gave TSMC and ultimately Taiwan a strategic nexus between two great powers US and china.

Taiwan’s strategic significance in US china rivalry

Taiwan’s monopoly over semiconductors has turned into a strategic asset of utmost significance that dictates the delicate balance of power in US-China rivalry. Through 2024, Taiwan exports of approximately 31.7–44% are to China and China accounts for 22% of Taiwan’s imports. In return, more than 54% of China’s imported semiconductors are from Taiwan making Taiwan the hub of China’s technology sector. Such dependence deeply entwines their economies while their geopolitics increasingly get strained. Its chip-making technology advanced something China is years away from mastering as it struggles to produce chips below 5nm. So Under the lens of Complex Interdependence Theory Such deep economic dependence creates an effective deterrence against Chinese military intervention.

But any attempt to seize control over Taiwan promises disastrous tampering not only to China’s technological aspirations but also to the global supply chain as a whole because no other country is presently Taiwan’s equal in terms of scale and sophistication in producing semiconductors, making Taiwan’s silicon sovereignty a unique pillar of regional security and global technology leadership. Such entwined relationship provides Taiwan strategic leverage, creating what analysts call a “silicon shield” that discourages Chinese aggression not with guns but with the threat of global economic disruption of over $90 billion annually for China. Complex interdependence thus replaces zero-sum thinking with a paradigm in which cooperation and mutual vulnerability exist, enabling rivals to remain economically connected even in the midst of geopolitical animosity.

In contrast, Taiwan is of considerable value to the United States, as it is the first in the island chain that provides strategic access to the Indo-Pacific, stretching from Taiwan to Japan and the Philippines. Strategically, Taiwan is also a buffer against foreign powers that are heavily represented in the Pacific. As the front-line island of the chain, Taiwan is at the top of China’s geopolitical priority. The United States is heavily dependent on Taiwan’s semiconductor industry; industry leaders such as Apple, NVIDIA, and Qualcomm rely on TSMC for premium chips that they have not yet produced in volume themselves.

Moreover, the importance goes beyond microprocessors, as Taiwan also produces critical components for the electronics ecosystem as a whole, and its shipping lanes and ports are arteries for the commerce of the world. This deep technological and economic interdependence is such that any disruption by natural disaster, political upheaval, or downright war would have fallout rippling through the U.S. economy and critical infrastructure. The United States having recognized Taiwan’s strategic value, Washington has used the Taiwan Relations Act of 1979 to sanction arms sales and maintain strong, unofficial diplomatic relations. Today, the two sides’ relationship is more than commerce it is a symbiotic one, in which the United States provides security while, in return, accessing the world’s finest chips.

Vulnerabilities

Apart from kinetic military threats, Taiwan is also susceptible to more extreme non-kinetic vulnerabilities that arise from profound economic interdependence with China. Beijing is able to utilize soft power and economic levers through the exchange of rare earth minerals (germanium and gallium) for semiconductors, thus creating an ostensibly favorable dynamic that hides coercive intent. China can also employ tight measures, such as blockades or quarantines, to exploit Taiwan’s geographical and supply chain vulnerabilities. They can block the island and cut its significant semiconductor exports.

This two-fold strategy of providing incentives and using pressure illustrates a latent defect in Taiwan’s capacity to defend itself and its semiconductor industry, hence susceptible to economic pressure without immediate military engagement. This implies that while Taiwan is a semiconductor manufacturing powerhouse, it is also seriously exposed to the US and China’s competition.

Taiwan’s case is similar to that of Ukraine, both suffering from vulnerabilities following shifts in global power balances and American foreign policy. Political transition in America has questioned U.S. commitments overseas, with Trump requesting Taiwan to shift defense expenditure from 2.4% to 10% of GDP and financially compensate for U.S. protection. Trump has accused Taiwan’s semiconductor industry of “stealing” U.S. business and threatened tariffs against its chips, showing a transactional policy undermining U.S. patronage.

Such rhetoric, coupled with the U.S. CHIPS Act encouraging domestic production, complicates Taiwan’s economic and security landscape. Furthermore, Taiwan suffers from hybrid warfare by China and Russia, with cyberattacks and propaganda targeting its vulnerabilities. Confronted with coercion by rivals and an unpredictable U.S. security “umbrella” susceptible to political caprice, Taiwan’s strategic predicament is the same as Ukraine’s predicament for stable support in the midst of shifting power interests in Washington.

Recommendations

porcupine Strategy: Multi-Layered Asymmetric Deterrence

Taiwan should follow a porcupine defense strategy relies on the creation of a strong, multi-layered defense mechanism that seeks to make any military attack both expensive and unsustainable. The strategy involves the placement of mobile and survivable missile batteries, the strengthening of cyber defense, and the creation of survivable civilian infrastructure that can withstand hybrid and gray-zone attacks. By creating redundancy in strategic areas like energy, communications, and semiconductor supply chains, Taiwan is most likely to resist and repel attacks without suffering catastrophic disruption. By using its technological advantage and social resilience, Taiwan aims to inflict lasting economic and political costs on any aggressor, thus deterring military attack through credible, sustained resistance.

To bolster its security in an increasingly hostile and unpredictable world, Taiwan ought to adopt a strategic posture based on the Dark Forest theory, in which it values strategic ambiguity and silent deterrence. At the center of the policy is the strengthening of its semiconductor industry by creating the key, hard-to-replicate processes within its borders; thus, any meddling military, cyber, or economic would unleash titanic global consequences, thereby raising the cost of aggression. In addition, Taiwan should create “technological tripwires” that can disable an aggressor if triggered. At the same time, it should move cautiously down the transparency track, disclosing some defensive benefits while concealing such sensitive capabilities as cyber retaliation from the public eye, thereby creating uncertainty among challengers.

By being transparent with trusted allies yet enigmatic to potential challengers, Taiwan can heighten resilience and attract allies yet remain unpredictable. By spending on covert yet plausible “silent deterrents” such as disrupting foe supply chains and offering intelligence, effectively places the Dark Forest principle into practice. Lastly, Taiwan’s security will no longer rely on its publicly observable power but on the veil of uncertainty it casts, making any attack a risky and potentially calamitous gamble.