China’s own manufacturing potential is expected to climb from 15pc of global capacity to 24pc at the end of the decade. Last week, SEMI, an industry group, wrote to the Biden administration warning that continued export controls against Chinese companies would undermine US manufacturers and incentivise foreign competitors.
Concerns are also growing about Chinese espionage in Taiwanese factories, or, in an extreme case, that Beijing may simply seize two TSMC factories that exist in China.
The US and China’s reliance on Taiwanese chips may be uneasy, but it is also stabilising. In the same way the nuclear arms race and the Cold War theory of mutually assured destruction protected both the US and the Soviet Union, mutually assured dependence on TSMC has meant neither side being willing to harm the other.
“It’s a potential point of tension, but on the other hand, there is such dependence that you have to be very careful,” says Triolo.
That interdependence may now be fraying. The US, as well as China, is trying to ease its reliance on the island nation. Last year, TSMC announced plans to build a $12bn fab in Arizona, a move believed to come with heavy subsidies. A recently passed national defence bill allows billions in incentives for US chip production, although where the money comes from is yet to be decided.
China is yet further behind, but has shown no signs of giving up. “They are making massive investments in semiconductor manufacturing on the mainland, says Brookwood. “It’s just a matter of time.”
Taiwan’s chip prowess has put it in the middle of an uneasy stalemate between the world’s superpowers. That may not last.
