US Commerce Secretary says if China seized TSMC it would be 'absolutely devastating' to the US economy, as it buys 92% of its cutting-edge chips from the Taiwanese manufacturer

TSMC's position as the world's largest chip manufacturer puts it in an enviable position in many ways, not least that the entire world is dependent on its output of today's best computer chips, and it reaps huge financial rewards as a result. 

However, nowhere is that dominance more keenly felt than in the United States, as US Commerce Secretary Gina Raimondo ponders what might happen should it fall into antagonistic hands.

When asked about the impact of a Chinese invasion of Taiwan and the subsequent seizure of TSMC, Raimondo said it would be "absolutely devastating" to the American economy (via Reuters). Adding that, "right now, the United States buys 92% of its leading edge chips from TSMC in Taiwan".

These comments come in the wake of reports that TSMC, Samsung, and Intel are to receive billions of dollars in funding to boost semiconductor manufacturing on US soil as part of the CHIPS Act, with a reported $5 billion in funding earmarked for TSMC alone to build in Arizona. 

The CHIPS Act aims to boost US-based chip making for both commercial and strategic reasons, as the country aims to break its reliance on imported silicon.

However, the idea that an invasion of Taiwan would necessarily lead to control of TSMC has previously been refuted by the company's chairman, Mark Liu. When asked if TSMC was a deterrent or a catalyst to a possible war, Lui said: "Nobody can control TSMC by force. If you take a military force or invasion, you will render TSMC factory not operable". 

"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."

Regardless, tensions between China and Taiwan remain high. Taiwan's military has recently made statements in regards to the inauguration of Taiwanese President-elect Lai Ching-te later this month, stating that it was prepared for any moves China might make during this period.

Whether an invasion of Taiwan would lead to control of one of its most highly valued assets or simply shut it down may well be up for debate, but given the level of dependency the US currently has regarding TSMC's output, it would likely cause a gigantic shift within the chip making industry no matter the outcome.

These warnings, in combination with vast amounts of funding to bring chip manufacturing into US territory, suggest the possibility is viewed as a major concern for the US government. 

Whether this is simply a continuation of the debate surrounding US economic dependency on foreign chip suppliers, or reinforcing of the need to cover its bases for potential world events, the US seems determined to bring large-scale chip manufacturing within its borders as soon as it possibly can.