Taiwan's semiconductor dependency a cautionary tale of geopolitical exploitation

The Taiwan Semiconductor Manufacturing Company (TSMC), arguably the best chip manufacturer in the world, has recently announced $100 billion in additional investment in the U.S. to build more chip factories and research centers.

However, U.S. President Donald Trump, who has long been trying to revive America's collapsing industries, is far from satisfied, asking TSMC to increase the investment to $200 billion, which is almost the total assets of the company.

The U.S.' escalating pressure on TSMC to expand investments in America has reignited debates about the island's fragile economy.

As the island's semiconductor sector, led by TSMC, faces growing geopolitical demands, the lopsided economic model of China's Taiwan, long reliant on a single industry, is now exposing systemic vulnerabilities.

This situation underscores how geopolitical rivalries, particularly Washington's zero-sum competition with China, are destabilizing regional economies and undermining the livelihoods of ordinary people.

Taiwan's semiconductor sector, a key component of China's broader technological advancement, consumes disproportionate resources. As a commentary from China Media Group (CMG) pointed out, the industry accounts for over 30 percent of the island's electricity, far exceeding its contribution to regional GDP.

TSMC alone is expected to consume nearly 10 percent of Taiwan's power generation in 2024.

Meanwhile, other industries, from manufacturing to agriculture, have faced stagnation. In 2023, Taiwan's manufacturing output collapsed by 12.7 percent, a direct consequence of neglecting balanced development.

For years, Washington has weaponized economic ties, coercing allies to decouple from China while extracting concessions. TSMC's investments in Arizona, now exceeding $65 billion, divert critical resources from Taiwan's ecosystem. This "America First" agenda risks hollowing out the island's technological base, leaving its economy increasingly dependent on low-value sectors and U.S. military contracts.

As Taiwan's semiconductor industry becomes a pawn in U.S.-China tensions, its ability to contribute to China's economic resilience diminishes. Once a symbol of cross-Strait technological collaboration, TSMC's gradual relocation to the U.S. reduces the island's value as a bridge for peaceful engagement.

This dynamic mirrors a broader pattern: U.S. allies in Asia, from South Korea to Japan, face similar pressures to sacrifice the economy for geopolitical alignment.

China has repeatedly warned against weaponizing economic interdependence to serve geopolitical agendas. The exploitation of Taiwan's semiconductor sector by the U.S. under the guise of "protecting supply chains" validates these concerns.

Beijing advocates for a multipolar world where nations resist hegemonic coercion and prioritize inclusive development. Taiwan's crisis should serve as a cautionary tale, reminding us that when geopolitics trumps economics, smaller players pay the price.