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Why Every American Should Care About Taiwan: The Catastrophic Reality of Losing TSMC

November 2, 2025•18 min read•By Defender of the West BTH

Reality Check:

If you're reading this on a smartphone, laptop, or tablet—your device contains semiconductors manufactured in Taiwan. If China takes Taiwan and cuts off access to these chips, modern American life as you know it stops. Not slows down. Stops.

The Question Americans Aren't Asking

Most Americans couldn't find Taiwan on a map. According to a 2023 survey, only 34% of Americans can correctly identify Taiwan's location. Even fewer understand what Taiwan actually produces or why it matters to their daily life.

This ignorance is dangerous. Because Taiwan—a democratic island of 23 million people, 100 miles off the coast of China—sits at the center of the most important geopolitical and economic question of our time:

What happens to America if we lose access to Taiwan's semiconductor manufacturing?

The answer is not "inconvenience." The answer is not "economic disruption." The answer is civilizational catastrophe—a cascading collapse affecting every single aspect of American life, from the mundane to the critical, from your morning coffee to national defense.

Let me show you exactly what losing Taiwan would mean. Not in abstract economic terms. In concrete, day-to-day, life-altering reality.

TSMC: The Most Important Company You've Never Heard Of

Taiwan Semiconductor Manufacturing Company—TSMC—is not a household name like Apple or Google. Yet it is, without exaggeration, the most critical company in the modern world economy.

TSMC manufactures 90% of the world's most advanced semiconductors.

Not 50%. Not 70%. Ninety percent.

These aren't just any chips. These are the cutting-edge processors that power:

TSMC's foundries in Taiwan—concentrated in Hsinchu and Tainan—represent the pinnacle of human technological achievement. Their 3-nanometer and 5-nanometer chip production processes are so advanced that only one other company (Samsung) can even attempt to compete, and Samsung is years behind on the most cutting-edge processes.

Intel, once America's semiconductor champion, abandoned its own advanced manufacturing and now relies on TSMC to produce its most advanced chips.

There is no alternative. There is no backup. There is no Plan B that scales to meet global demand.

And all of this capacity—every single advanced fab—sits on an island that China claims as its territory and has threatened to take by force by 2027.

Scenario: Month One After Chinese Control of Taiwan

Let's walk through what happens if China successfully invades Taiwan and either takes control of TSMC or—more likely—TSMC's facilities are destroyed in the fighting.

The destruction is probable because TSMC's fabs are extraordinarily fragile. A modern semiconductor fab requires:

Missile strikes, power grid collapse, or even the evacuation of skilled workers would shut down production for months—possibly years. And that's the optimistic scenario. A more realistic scenario is that TSMC leadership, to prevent China from gaining strategic advantage, destroys critical equipment before it can be captured.

Either way: production stops. The pipeline of advanced semiconductors to the United States—and the world—goes to zero.

Week 1-2: The Invisible Crisis Begins

Most Americans don't notice anything immediately. There are chips in inventory. Devices in warehouses. Products in the pipeline.

But behind the scenes, every major technology company in America goes into crisis mode. Emergency board meetings. Frantic calls to suppliers. Desperate searches for alternative chip sources that don't exist.

Apple announces it's delaying the next iPhone launch "indefinitely." Google, Amazon, Microsoft, and Meta halt orders for new data center equipment—there are no AI chips available. Nvidia's stock craters 60% in a single day as Wall Street realizes the company can't fulfill orders for AI accelerators.

Auto manufacturers—already operating on razor-thin chip inventories—begin idling factories. Toyota, Ford, GM, and Tesla all announce production slowdowns.

The stock market starts to panic. Tech stocks hemorrhage value. The S&P 500 drops 20% in five trading days. Retirement accounts evaporate.

Week 3-4: Consumer Impact Begins

Now ordinary Americans start to feel it.

Your smartphone breaks. Screen cracks, battery dies, charging port fails—normal wear and tear. You go to buy a new phone. There are none. Not "none of the model you want." None. Apple Stores have empty shelves. Best Buy has a waiting list 6 months long. Your carrier has no inventory.

"We're experiencing unprecedented supply chain disruptions," the employee tells you. You're stuck with your broken phone, or you pay $3,000 on eBay for a used iPhone that would normally cost $800.

Your laptop dies. Same story. No replacements available. Your work-from-home job is suddenly in jeopardy because you can't replace your computer. Prices for used laptops triple on secondary markets.

Your car has a problem. Nothing major—a sensor fails, the infotainment system glitches, the parking assist stops working. You take it to the dealer. "We can't get the replacement part. It requires chips manufactured in Taiwan. We have no ETA on availability. Could be 6 months. Could be longer."

Your car, which you're still making payments on, sits partially functional or completely inoperable.

Month 2-3: Economic Contagion

Auto manufacturing collapses. Without chips, cars can't be built. Modern vehicles contain 1,000-3,000 semiconductors controlling everything from engine timing to airbags to entertainment systems.

Ford, GM, and Stellantis lay off 50% of their workforce. Tesla shuts down multiple factories. The United Auto Workers union protests in Detroit as 200,000 workers lose their jobs. Entire communities dependent on auto manufacturing face depression-level unemployment.

Dealerships sit with empty lots. Used car prices spike 100% as Americans desperately compete for the dwindling supply of functional vehicles.

The tech sector implodes. Apple, Google, Amazon, Microsoft, Meta—all announce mass layoffs. Without chips to build new products or expand data centers, there's no revenue growth. There's contraction.

Silicon Valley, Austin, Seattle—tech hubs face the worst economic downturn since the Great Depression. Startups fold. Venture capital dries up. The innovation economy grinds to a halt.

700,000 tech workers lose their jobs in three months.

The medical system strains. Hospitals can't replace broken MRI machines, CT scanners, or ultrasound equipment. All of these devices contain advanced chips. Medical device manufacturers can't produce new equipment.

Wait times for diagnostic imaging increase from days to months. Patients with cancer, heart disease, and other serious conditions face delayed diagnoses. People die waiting for scans that could have detected problems early.

Telecommunications infrastructure begins to fail. 5G network expansion stops completely. Existing cell towers start to fail as worn-out components can't be replaced. Rural areas lose coverage first. Internet speeds slow as data centers can't expand capacity or replace aging equipment.

Month 4-6: Civilizational Stress

By month four, America is experiencing an economic depression that rivals the 1930s—but with a modern twist. It's not just unemployment and poverty. It's technological regression.

Unemployment hits 15%. The tech sector, auto manufacturing, telecommunications, consumer electronics, medical devices—all in free fall. The ripple effects devastate retail, hospitality, real estate, and finance.

GDP contracts 8% in a single quarter—the worst decline since World War II.

Small businesses collapse. Restaurants that relied on point-of-sale systems with chip-enabled credit card readers can't replace failed equipment. They go cash-only, losing 60% of customers. Retail stores can't process transactions. Supply chain management software fails without server capacity to run on.

1.2 million small businesses close permanently.

The digital economy dissolves. No new smartphones means mobile commerce collapses. Apps that powered gig economy jobs (Uber, DoorDash, Instacart) become unusable as drivers' phones fail and can't be replaced.

2 million gig workers lose their income source overnight.

Education technology fails. School districts that adopted tablet-based learning can't replace broken devices. Students fall behind. The education gap between wealthy districts (which can hoard working devices) and poor districts (which can't) explodes.

Universities that rely on advanced computing for research—especially in AI, computational biology, and physics—effectively shut down entire departments. American scientific research grinds to a halt.

The military confronts critical vulnerabilities. Advanced weapons systems require cutting-edge chips. F-35 fighters need chip replacements for avionics. Guided missiles require precision semiconductors. Drones need computing power.

The U.S. military, in the middle of a potential conflict with China, discovers that its technological advantage is evaporating. Maintenance backlogs grow. Weapon systems are cannibalized for parts. Readiness rates plummet.

And China, which now controls Taiwan and TSMC's facilities (or at least denies them to the West), continues advancing its military technology.

Month 6-12: The Long Emergency

Six months in, it's clear this is not a temporary disruption. This is the new reality.

Rationing begins. The federal government implements a priority system for chip allocation. Medical devices get first priority. Defense systems second. Critical infrastructure third. Consumer electronics dead last.

If your phone breaks, you don't get a replacement unless you work in healthcare, defense, or critical infrastructure. Everyone else waits. For years.

Black markets flourish. Working smartphones sell for $5,000. Laptops for $8,000. A new car—if you can find one—costs double the pre-crisis price. Counterfeit chips flood the market, many of them defective or dangerous.

Organized crime makes billions smuggling electronics and chips.

American innovation dies. Without access to cutting-edge chips, American tech companies can't compete globally. Chinese companies—with access to TSMC production or Chinese alternatives—dominate AI development, autonomous vehicles, quantum computing, and biotechnology.

The 21st century was supposed to be the American century, driven by technological dominance. Instead, the U.S. becomes a second-tier tech power, dependent on Chinese supply chains and Chinese innovation.

Geopolitical power shifts. China leverages control of semiconductor supply to coerce other nations. "Side with us on this UN vote, or your chip allocation gets cut." "Extradite this dissident, or no 5G equipment for your country."

American allies—Japan, South Korea, Europe—face impossible choices: defy China and face economic collapse, or submit to Chinese demands and abandon the U.S.-led order.

One by one, they choose survival. The alliances that defined the post-WWII world dissolve. American global leadership ends.

Year 2-5: The Dark Years

Two years after losing Taiwan, America is unrecognizable.

Persistent technological scarcity. Consumer electronics remain rare and expensive. Most Americans use devices that are 5-10 years old, barely functional, held together with repairs and hope.

Telecommuting becomes impossible for many as computers fail and can't be replaced. Workers return to offices—if they still have jobs. Productivity craters.

Infrastructure decay accelerates. Traffic lights fail because replacement chips don't exist. Power grid management systems degrade. Water treatment plants operate with outdated equipment prone to failure.

Rolling blackouts become common. Water quality alerts spike. Americans in 2027 live with infrastructure reliability comparable to developing nations.

Medical care deteriorates. Advanced diagnostics become rare luxuries. Cancer screenings decline. Preventable diseases go undetected. Life expectancy begins to drop for the first time in a century (outside of pandemics).

Wealthy Americans fly to China or Chinese-aligned nations for advanced medical care. The poor make do with 20th-century medicine.

Military obsolescence. By year five, America's military technology is a decade behind China's. The F-35 fleet is partially grounded due to lack of replacement parts. Navy ships operate with degraded radar systems. Missile stockpiles shrink because new production requires unobtainable chips.

China openly challenges American power in the Pacific. Japan, South Korea, and the Philippines accommodate Chinese demands. The U.S. Navy retreats to Pearl Harbor and San Diego.

The American security guarantee—which prevented major wars for 75 years—is exposed as hollow. Regional conflicts erupt. The world becomes dramatically more dangerous.

But What About the CHIPS Act? Can't We Build Our Own Fabs?

This is the question optimists ask. And it's important to understand the brutal reality.

Yes, the United States passed the CHIPS and Science Act in 2022, allocating $52 billion to rebuild American semiconductor manufacturing. TSMC is building fabs in Arizona. Intel is building in Ohio. Samsung is building in Texas.

This is necessary. It's important. But it's not nearly enough, and it's not fast enough.

Here's why:

1. Timeline: Building a cutting-edge semiconductor fab takes 3-5 years minimum. TSMC's Arizona facility won't reach full production until 2025-2026 at the earliest. Even then, it will produce 5-nanometer chips—already one generation behind TSMC's Taiwan fabs, which are producing 3nm and developing 2nm.

If we lose Taiwan in 2027, American fabs won't be ready to fill the gap.

2. Scale: TSMC's Arizona facility, when complete, will have capacity for ~20,000 wafers per month. TSMC's Taiwan facilities produce 1.3 million wafers per month.

The Arizona fab represents less than 2% of TSMC's total capacity.

Even if we build 10 such fabs (which would take a decade and $500 billion), we still wouldn't replace Taiwan's capacity.

3. Expertise: Advanced semiconductor manufacturing requires extraordinary expertise—engineers who understand processes developed over decades. TSMC employs 75,000 people, many of whom have specialized knowledge that exists nowhere else.

You can't just build a fab and flip a switch. You need the people who know how to run it. And those people overwhelmingly live in Taiwan.

4. Supply chains: A semiconductor fab requires thousands of specialized components, chemicals, and materials. Many of these are produced by single-source suppliers—often in Asia, often dependent on TSMC's orders to remain viable.

If TSMC's Taiwan operations cease, many of these suppliers go bankrupt. The entire ecosystem collapses. Even American fabs can't operate without these inputs.

The optimistic assessment: Losing Taiwan sets American semiconductor capacity back 10-15 years.

The realistic assessment: Losing Taiwan causes civilizational-scale disruption that takes a generation to recover from.

The Economic Toll: Putting a Number on Catastrophe

Economists have attempted to quantify the cost of losing Taiwan and TSMC. The numbers are staggering.

Bloomberg Economics estimate: $10 trillion in immediate economic losses to the global economy in the first year. For context, the 2008 financial crisis cost roughly $2 trillion in lost GDP.

RAND Corporation wargame: U.S. GDP declines by 10% in the first year of a Taiwan crisis, comparable to the Great Depression. Unemployment reaches 20%. Stock markets lose 50% of their value.

Rhodium Group analysis: American consumers face $1.6 trillion in higher costs over five years due to electronics scarcity and price spikes.

For a typical American family, this means:

Total impact on median American household: $50,000-$80,000 in direct costs over five years, not counting lost wages or reduced quality of life.

And this is the economic cost. It doesn't count the geopolitical costs: loss of American global leadership, emboldened adversaries, regional wars, potential great power conflict.

Why Most Americans Don't Know This

If the stakes are this high, why isn't Taiwan a front-page issue every single day?

Several reasons:

1. Complexity: Semiconductor supply chains are incredibly complex. Explaining why TSMC matters requires understanding chip manufacturing, geopolitics, and economics. Most media outlets simplify to the point of meaninglessness or ignore the issue entirely.

2. Invisibility: Chips are inside everything but visible in nothing. Americans don't think about semiconductors the way they think about oil or food. The dependency is total but hidden.

3. Distance: Taiwan is 7,000 miles away. Americans are focused on issues that feel immediate—inflation, healthcare, crime. A potential crisis on the other side of the world doesn't generate urgency.

4. Normalcy bias: The smartphone always works. The car always starts. The hospital always has equipment. Americans assume this will continue forever because it always has. The possibility of technological scarcity is psychologically unthinkable.

5. War fatigue: After Iraq and Afghanistan, many Americans are skeptical of foreign commitments. "Why should we fight for Taiwan?" sounds like "Why should we fight in the Middle East?"—but the situations are completely different.

The Middle East has oil, which can be sourced from multiple countries. Taiwan has advanced semiconductors, which cannot.

What Happens If We Do Nothing

The scenario outlined above is not inevitable. But it becomes more likely every day we fail to prepare.

If current trends continue:

China's military continues modernizing. By 2027, the PLA has overwhelming conventional superiority near Taiwan. The ability to conduct a successful amphibious invasion reaches critical threshold.

Taiwan's defenses remain inadequate. Despite warnings, Taiwan's military budget stays below 3% of GDP. Asymmetric capabilities are underfunded. Conscription remains ineffective.

American deterrence remains ambiguous. The U.S. maintains "strategic ambiguity" about whether it would defend Taiwan. This ambiguity, intended to restrain both China and Taiwan, instead creates uncertainty that emboldens China.

American public opinion remains uninformed. Polls show only 40% of Americans support defending Taiwan, largely because they don't understand what's at stake.

U.S. military readiness lags. Munitions stockpiles are depleted. Shipbuilding can't keep pace with China's. Bases in the Pacific remain vulnerable.

Under these conditions, China calculates that the window for a successful invasion is open. The cost is high but acceptable. American intervention is uncertain. Even if the U.S. intervenes, it might be too late or too cautious to change the outcome.

So China strikes. And everything outlined above unfolds.

What Every American Can Do

The scale of this crisis can feel paralyzing. What can one person do about geopolitics and semiconductor supply chains?

More than you think.

1. Understand the issue. You've taken the first step by reading this. Now share it. Explain to family, friends, coworkers why Taiwan matters. The biggest obstacle to action is ignorance.

2. Support domestic semiconductor production. Contact your congressional representatives. Tell them you support funding for the CHIPS Act and additional investments in American manufacturing. This is not a partisan issue—both parties recognize the threat.

3. Demand clarity from leaders. The U.S. should end "strategic ambiguity" and clearly state that it will defend Taiwan. China must understand that invasion means war with America. Ambiguity invites miscalculation.

4. Support Taiwan's defense. America should dramatically increase arms sales to Taiwan, prioritizing asymmetric capabilities—anti-ship missiles, sea mines, drones. Taiwan should be armed like a porcupine—impossible to swallow.

5. Career choices matter. If you're young and technically skilled, consider careers in defense technology, semiconductor engineering, or national security. Companies like Anduril, Palantir, Shield AI, and traditional defense contractors need talent. Your skills can directly contribute to deterrence.

6. Divest from Chinese technology dependence. Personally and professionally, reduce reliance on Chinese-made electronics where alternatives exist. This won't solve the problem, but it reduces leverage.

7. Vote accordingly. Make Taiwan policy a voting issue. Ask candidates what they will do to prevent a Taiwan crisis. Demand specific answers about military readiness, deterrence strategy, and semiconductor independence.

The Stakes Could Not Be Higher

Taiwan is not "just" about semiconductors, though that alone would be enough to justify attention.

Taiwan is about whether democracies can defend themselves against authoritarian aggression.

Taiwan is about whether America remains the world's leading technological power or cedes that position to China.

Taiwan is about whether the international order—built on rules and alliances—survives or collapses into a world where might makes right.

Taiwan is about whether your children grow up in a world of American innovation and freedom or Chinese surveillance and control.

And Taiwan is about whether your smartphone works, your car runs, your hospital has equipment, your job exists, and your retirement is secure.

These stakes are not abstract. They are immediate, personal, and civilizational.

The catastrophic scenario outlined in this article is preventable. But only if Americans understand what's at stake and demand action.

The clock is ticking. 2027 is less than two years away.

Every American should care about Taiwan because every American depends on Taiwan—they just don't know it yet.

Now you know. What will you do about it?

About TheWestsWord

I analyze the threats facing democratic societies and the technology we need to defend them. From geopolitical analysis to defense innovation, my mission is to inform and equip those who will defend the West.

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