Tag Archives: Taiwan China

The End of Taiwan? The End of U.S. and Europe Combined

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Prosecutors in Taiwan indicted  in August 2025 three people in a case about sensitive chip technology, alleging they stole information from Taiwan Semiconductor Manufacturing (TSMC) to help one of TSMC’s top equipment suppliers, Tokyo Electron, win more orders…Taiwanese officials say the theft of trade secrets has grown over the past decade and point most of the blame at China. Over the past couple of years, Taiwan’s investigation bureau has probed more than 120 cases involving trade-secret theft. “If Taiwan’s technology hub falls or its technologies are lost, the impact will extend beyond Taiwan to the U.S., Europe and the rest of the world,” Sun Chen-yi, deputy director general of the investigation bureau at Taiwan’s Ministry of Justice, said in an interview before his retirement in July 2025.

Excerpt from Yang Jie et al., Three Accused of Stealing TSMC Chip Secrets to Aid Japanese Supplier, WSJ, Aug. 28, 2025

Who is Ready for War with China in 2027: Venture Capitalists

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Anduril Industries—named after a magical sword from J.R.R. Tolkien’s “Lord of the Rings” novels—is central to Silicon Valley’s quest to take on weapons makers like Lockheed Martin and Northrop Grumman. Since its founding in 2017, Anduril has raised $3.7 billion in venture funding, incl The newcomers’ hope is that the Pentagon will eventually kill off what Luckey, the CEO of Anduril, calls “old legacy zombie programs,” like expensive jet fighters and attack helicopters, and instead buy autonomous weapons, like drones and uncrewed submarines. The U.S. military, Luckey and others say, needs large numbers of cheaper and more intelligent systems that can be effective over long stretches of ocean and against a manufacturing and technological power like China. 

Many teams inside Anduril are building only weapons that can be completed by 2027—the year Chinese President Xi Jinping has said his country should be prepared to invade Taiwan. The fictional sword for which Anduril is named is also called the “Flame of the West.” For decades, the U.S. government funded defense companies, like Lockheed Martin, to develop new weapons, ranging from stealth aircraft to spy satellites. But as the private-sector money available for research and development has outstripped federal-government spending, particularly in areas like AI, a new cohort of defense startups is using private capital to develop technology for the Pentagon. The amount of private capital flowing into the venture-backed defense-tech industry has ballooned, with investors spending at least 70% more on the sector each of the past three years than any prior year. From 2021 through mid-June 2024, venture capitalists invested a total of $130 billion in defense-tech startups, according to data firm PitchBook. The Pentagon spends about $90 billion on R&D annually.

The Pentagon is credited with helping to create Silicon Valley by plowing money into tech companies in the 1950s and ’60s, investing in electronics and buying microchips used in nuclear-missile guidance systems, satellites, and computers. That investment, says Paul Bracken, an emeritus professor of management and political science at Yale University, led the Defense Department to become, in effect, the “mother of all venture-capital firms.”

Excerpt from Sharon Weinberger, Tech Bros Are Betting They Can Help Win a War With China, WSJ, Aug. 9, 2024

Planning for the Invasion: Taiwan

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If China were to invade Taiwan, it might start by severing the 14 undersea internet cables that keep the island connected to the world. Taiwan is adding cables and planning how to defend their landing points. But it is also testing antennae in 700 locations, including some outside Taiwan. These would be able to send and receive signals by means of satellites in low orbit, like the ones Starlink uses. The goal is to make the antennae “as mobile as possible” to survive an attack…China has the capability to shoot down satellites. But Starlink developed by SpaceX (Elon Musk) is made up of over 4,000 of them and aims eventually to have tens of thousands…Unsurprisingly, Taiwan is looking to reduce its dependence on others including Starlink. Its space agency is developing its own low-orbit communication satellites. The first is expected to be launched in 2025.

China’s low-orbit ambitions are much larger. In 2020 the government filed papers with the International Telecommunication Union, a UN body, for a 12,992-satellite constellation. A year later the government established China Satellite Networks Group Limited and tasked it with developing satellite internet. At least seven state-owned and private Chinese companies are building satellite factories, with the expectation that they will soon be able to produce several hundred small communications satellites per year.

Officials in Beijing have developed a space-race mentality. Specific orbits and radio frequencies are “rare strategic resources” that Starlink wants to “monopolize”, warned the Liberation Army Daily in 2022….The Liberation Army Daily complains that there is only room for 50,000 satellites in low-Earth orbit and that Starlink may eventually take up more than 80% of that space. But the calculation is not that straightforward, says Juliana Suess of the Royal United Services Institute, a think-tank in Britain. Imagine low orbit as a highway, she says. What needs to be calculated is how many moving cars that highway can safely accommodate. Much will depend on the size of satellites and their trajectories.” But at this moment, there is lack of norms surrounding traffic in low orbit.

Spacex has an important advantage. Satellites in low orbit don’t last very long, so the company replaces them on a regular basis. That entails a large number of rocket launches. Spacex has the world’s best system for that, the partially reusable Falcon 9 rocket. Now it is working on a much larger, fully reusable spacecraft called Starship which could launch hundreds of satellites at a time. Some Chinese companies appear to be trying to build knock-offs.

Excerpts from China in Space: A New Mandate in the Heavens, Economist, May 20, 2023


Squeezing China: the Asian NATO

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In defense terms, America’s “pivot to Asia” is not a single move, but a weaving of initiatives—with overlapping bi-, tri-, quadri- and multilateral deals—to create an ever-thickening lattice on China’s periphery. Some deals are modest; many are uncertain if tested in war. But they amount to the “fortification of America’s forward defense perimeter in the western Pacific.”…Despite its pacifism, Japan is greatly boosting defense spending. American marines in Okinawa are practicing how to scatter and defend the islands and sea passages. The next link, Taiwan, is under intense strain, given China’s aim to retake the self-governing island by force if necessary. America may soon announce the first “drawdown” of weapons from its own arsenal, pre-emptively strengthening Taiwan much as it has armed Ukraine. The Philippines, the next link, is weaker but has agreed to give America access to nine bases in the country; in return America is helping to beef up its forces….

America is devising ways to disperse its jets in wartime and hardening the defense of Guam. It wants to project more power from Australia, where it rotates air force and marine units. It is working with Britain to supply nuclear-powered submarines to Australia under the aukus deal; the three are also working on new weapons, including hypersonic missiles. Farther afield, the Quad—America, Australia and Japan working with India—is not a formal security grouping, but their navies exercise together. Across the region, American-led war-games are becoming bigger and more sophisticated. Sometimes America’s security arrangements are limited, for instance its new defense deal with Papua New Guinea; or its efforts to help littoral states improve “maritime domain awareness” to, say, curb illegal fishing by Chinese fleets. This, too, helps enmesh America in the region…

China accuses America of building an “Asian NATO”. But the reality is a looser system. America’s friends and allies in the “Indo-Pacific” have no mutual-defense commitments akin to NATO’s Article 5, under which an attack on one is an attack on all, nor integrated multinational commands.

Excerpts from America and China: The Chain, Economist, June 15, 2023

Under Wraps: US-China Hostilities

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The mid-air crash in 2001 between an American EP3 spy plane and a Chinese fighter jet that left the Chinese pilot dead and 24 American crew members in detention after an emergency landing in China.

China seized an American underwater drone in the South China Sea in 2016. The U.S. sent radio messages requesting that the drone be returned, but the Chinese ship merely acknowledged the messages and ignored the request. The US subsequently demanded the drone’s return.

Can the Switzerland of Chips Crush the Global Economy?

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Taiwan Semiconductor Manufacturing Co (TSMC) has emerged over the past several years as the world’s most important semiconductor company, with enormous influence over the global economy. With a market cap of around $550 billion, it ranks as the world’s 11th most valuable company. Its dominance leaves the world in a vulnerable position, however. As more technologies require chips of mind-boggling complexity, more are coming from this one company, on an island that’s a focal point of tensions between the U.S. and China, which claims Taiwan as its own.

The situation is similar in some ways to the world’s past reliance on Middle Eastern oil, with any instability on the island threatening to echo across industries….Being dependent on Taiwanese chips “poses a threat to the global economy,” research firm Capital Economics recently wrote. Its technology is so advanced, Capital Economics said, that it now makes around 92% of the world’s most sophisticated chips, which have transistors that are less than one-thousandth the width of a human hair. Samsung Electronics Co. makes the rest. 

The U.S., Europe and China are scrambling to cut their reliance on Taiwanese chips. While the U.S. still leads the world in chip design and intellectual property with homegrown giants like Intel Corp. , Nvidia Corp. and Qualcomm, it now accounts for only 12% of the world’s chip manufacturing, down from 37% in 1990, according to Boston Consulting Group. President Biden’s infrastructure plan includes $50 billion to help boost domestic chip production. China has made semiconductor independence a major tenet of its national strategic plan. The European Union aims to produce at least 20% of the world’s next-generation chips in 2030 as part of a $150 billion digital industries scheme.

The Taiwanese maker has also faced calls from the U.S. and Germany to expand supply due to factory closures and lost revenues in the auto industry, which was the first to get hit by the current chip shortage.

Semiconductors have become so complex and capital-intensive that once a producer falls behind, it’s hard to catch up. Companies can spend billions of dollars and years trying, only to see the technological horizon recede further. A single semiconductor factory can cost as much as $20 billion. One key manufacturing tool for advanced chip-making that imprints intricate circuit patterns on silicon costs upward of $100 million, requiring multiple planes to deliver…

Taiwanese leaders refer to the local chip industry as Taiwan’s “silicon shield,” helping protect it from such conflict. Taiwan’s government has showered subsidies on the local chip industry over the years, analysts say.

Excerpts from Yang Jie et al., The World Relies on One Chip Maker in Taiwan, Leaving Everyone Vulnerable, WSJ, June 19, 2021

Water Transfers: Submarine Pipelines

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Taiwan’s Kinmen, a cluster of tiny islands two kilometres (just over a mile) off the coast of China’s Fujian Province…is facing a new threat: a water shortage. Officials say that groundwater on its largest island is being depleted. Tourism from the mainland China, which has grown rapidly since 2008…, is putting pressure on its reservoirs…. Kinmen’s water authorities are ready to sign a 30-year agreement with their counterparts in Fujian to buy water from Longhu Lake in Jinjiang city.  Taiwan is to build a submarine pipeline 17km long from Fujian’s coast to Kinmen at a budgeted cost of 1.35 billion Taiwanese dollars ($44m). After 2017, when it is scheduled to be finished, China will eventually provide up to 40% of Kinmen’s water. The signing is expected soon after a meeting on Kinmen on May 23rd between ministers from China and Taiwan, the first such encounter on the islands since the time of Mao.

When Taiwan’s parliament approved the budget for the pipeline in January 2015, the opposition Democratic Progressive Party (DPP), which supports independence, made surprisingly few objections. Only the small, hardline Taiwan Solidarity Union voiced concerns about having such a large share of Kinmen’s water supplied by China. Pragmatists see the deal as the best way to boost Kinmen’s economy: piping water from China is much cheaper than using desalination plants. Taiwanese officials would be allowed to carry out inspections in China, such as testing water in the lake.

The Politics of Water: Peace Pipe, Economist, May 23, 2015, at 32.