The stern warnings issued by China ahead of Taiwanese President Tsai Ing-wen's tour of the US and Central America have highlighted the threat that intensifying Chinese pressure poses to the island's security and stability. But the warnings also underscored the degree to which the US efforts to "on-shore" semiconductor manufacturing could cripple Taiwan's economy at a critical time.
Taiwan's security rests on two main pillars: self-governance and economic prosperity. Maintaining de facto sovereignty is non-negotiable, which rules out an accommodation that would placate China, at least under the current Chinese leadership. Even in the face of economic and diplomatic coercion, Taiwan is unlikely to relinquish its democratic system.
Taiwan's dominance in semiconductor manufacturing is critical to its economic security. Taiwan produces over 60% of the world's semiconductors and more than 90% of all high-end chips.
