US warned Apple, Nvidia and others of China-Taiwan chip threat, industry slow to shift production: Report
Classified briefings cautioned Apple, Nvidia, AMD, Qualcomm and Intel about a possible 2027 China move on Taiwan.
A 2022 industry report warned a Taiwan disruption could trigger an economic crisis worse than 2008, with US GDP falling 11%.
Despite billions in subsidies and tariff threats, America’s share of global chip production may remain near 10% by 2030.
For years, US officials have warned that America’s heavy reliance on Taiwan for advanced semiconductors poses a big national security and economic risk. For the unversed, Taiwan is responsible for making roughly 90 percent of the world’s cutting-edge chips, making any disruption, including a Chinese blockade, a severe threat to the global economy.
Many administrations have tried to reduce that dependence. President Joe Biden pushed through the CHIPS and Science Act, offering $50 billion in subsidies to boost domestic manufacturing. President Donald Trump later escalated pressure through tariff threats, forcing companies to shift production to the US.
Top executives from Apple, Nvidia, AMD, Qualcomm, and Intel were given classified briefings, warning that China could attack Taiwan as early as 2027. Despite these warnings, many companies were hesitant to commit to more expensive US manufacturing. According to industry estimates, American-made chips can cost more than 25% more than those produced in Taiwan.
A 2022 confidential report commissioned by the Semiconductor Industry Association warned that cutting off Taiwan’s chip supply could result in the worst economic crisis since the Great Depression. It predicted an 11 percent drop in US GDP and a 16 percent contraction in the Chinese economy. Bloomberg Economics estimated that a Taiwan conflict could cost more than $10 trillion globally.
Customers were slow to place orders even though TSMC committed more than $50 billion to Arizona plants under the CHIPS Act. Intel and Samsung struggled to find buyers, and it resulted in reduced federal grants.
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This pressure increased after Trump threatened semiconductor tariffs of up to 100% for companies that do not source from US facilities. In the end, Nvidia agreed to buy more from TSMC’s plants in Arizona, which led TSMC to increase its US investment by $100 billion and quicken plans for more factories.
Since then, Taiwanese companies have committed an additional $150 billion in US investments and $250 billion in credit guarantees to facilitate the relocation of technology. However, it is anticipated that America’s global share will only be around 10% by 2030, despite the US spending $200 billion on semiconductors.
While acknowledging that progress is being made, industry leaders warn that it will take years to rebuild domestic capacity. Taiwan continues to be the center of advanced chip packaging, highlighting the fact that complete supply chain independence is still a way off.
