J.M.P.P. R.I.P. B5: RLOAI
- Mar 2, 2009
- MBTI Type
Report: Supply Chain Interdependence and Geopolitical Vulnerability: The Case of Taiwan and High-End Semiconductors.
- The dominance of Taiwan over global semiconductor production creates geopolitical and economic vulnerabilities for the United States and its allies, as well as for Taiwan.
- These vulnerabilities provide China with a potential asymmetric advantage.
- Without preparation, a severe semiconductor supply disruption would have an immediate and significant impact on the U.S. economy and would create a national security challenge.
- Because of the potential disruption to the global semiconductor supply chain and the absence of prior investment to create alternative semiconductor fabrication capacity, there are generally no good options for responding to either a peaceful or contested unification scenario.
- Taking steps to support any Taiwanese resistance efforts could lead to broad and lengthy economic turbulence that would be politically unsustainable.
- Any actions taken to offset the loss of semiconductor production access would likely lead to a long-term decline in economic output for the United States and its allies.
- The vulnerabilities generated by Taiwan's dominance of the semiconductor supply chain were not well understood by any of the players who participated in the TTX.
- Most of the players were unaware of (1) the degree of interdependence within the global semiconductor supply chain and (2) the time and expense that would be required to generate an alternative supply.
- The U.S. government should improve its analysis and understanding of the semiconductor supply chain specifically and the degree of supply chain interdependence in general.
- An immediate and concerted effort should be made to reduce the concentration of semiconductor production in Taiwan.
- The Taiwan Semiconductor Manufacturing Corporation (TSMC) should be incentivized to move at least some production out of Taiwan.
- Irrespective of TSMC actions, governments should take action to strengthen both domestic and allied semiconductor production.
- The United States should coordinate with its allies to discourage and heavily regulate the movement of facilities and equipment to China.
- Collaborative relationships with allied governments and industries are essential, even if such relationships run counter to the normal impulse to keep sectors separate.
- Executive agencies need to engage with industry partners to identify the strengths and vulnerabilities of the U.S. position within the global semiconductor supply chain.
- Instead of acting unilaterally, Washington should engage its allies and partners to respond as a united, multinational bloc.