TSMC Warns It Will Close Operations If China Invades Taiwan

The chairman of the world’s largest chip maker TSMC, has issued a blunt warning about chip production if China begins military action against Taiwan.

On Tuesday a number of Taiwanese governmental websites were subjected to a DDoS cyberattack, amid rising tensions with China over the visit by US House of Representatives Speaker Nancy Pelosi.

Pelosi met with Taiwan President Tsai Ing-wen, but Beijing warned the US would “pay the price” for Pelosi’s visit.

Sabre rattling

Pelosi is the most senior US politician in 25 years to visit Taiwan, since then Republican house speaker Newt Gingrich visited Taiwan in 1997.

However China under President Xi Jinping has dramatically stepped the rhetoric about Taiwan, and he has previously said that “reunification” with Taiwan “must be fulfilled”.

Pelosi, and her delegation said they had come to Taiwan to make it “unequivocally clear” that the US would not “abandon” the island.

The visit triggered the Chinese military to begin live fire military exercises either in, or close to Taiwan’s defensive zone.

Indeed, Taiwanese defence officials say the Chinese military is operating in its territory and is effectively blockading the island.

TSMC meeting

During her brief visit, Pelosi also meet with the self-governing island’s most important business leader, namely Mark Liu, chairman of Taiwan Semiconductor Manufacturing Co.

During the meeting, Taiwanese media reported that Liu and Pelosi discussed the US’s recently passed CHIPS and Science Act.

The new US legislation includes $52 billion to support chipmaking in the US.

TSMC will likely be among its beneficiaries as a result of the $12 billion chip factory it is planning to build in Arizona.

No winners

TSMC’s chairman then warned about the likely impact on the world’s supply of semiconductors, if China were to invade Taiwan.

Besides being the world’s largest chip maker, TSMC is also the most valuable company in all of Asia.

It is also the tenth most valuable company in the world.

If China were to invade Taiwan, the most-advanced chip factory in the world would be rendered “not operable,” TSMC Chair Mark Liu said in an interview with CNN this week.

“Nobody can control TSMC by force,” said Liu. “If you take a military force or invasion, you will render TSMC factory not operable,” Liu said. “Because this is such a sophisticated manufacturing facility, it depends on real-time connection with the outside world, with Europe, with Japan, with US, from materials to chemicals to spare parts to engineering software and diagnosis.”

“The war brings no winners, everybody’s losers,” Liu said.

Liu compared a potential conflict in Taiwan to Russia’s invasion of Ukraine, saying that while the two conflicts are very different, the economic impact to other countries would be similar.

He encouraged political leaders to try to avoid war.

“Ukraine war is not good for any of the sides, it’s lose-lose-lose scenarios,” Liu said.

Liu also said an invasion of the island would cause economic turmoil for China, Taiwan and Western countries.

Liu said that TSMC sells chips to consumer-facing Chinese companies that need the company’s services and the supply of advanced computer chips.

“How can we avoid war? How can we ensure that the engine of the world economy continues humming, and let’s have a fair competition,” Liu said.