Taiwan Quietly Urges US to Calm Rhetoric on China Chip Risk

Daily Report USA

Spooked by the threat that China might invade Taiwan, the US wants to cut its dependence on the island’s world-beating microchips. Officials in Taipei believe the Biden administration is going too far. In quiet conversations and back-channel warnings, Taiwanese officials have urged their American counterparts to tone down their rhetoric about the dangers of relying on chips made by Taiwan Semiconductor Manufacturing Co.

The officials are particularly unhappy with Commerce Secretary Gina Raimondo, who has called US dependence on Taiwanese chips “untenable” and “unsafe.” They were also uneasy with remarks by a top Republican lawmaker, Michael McCaul, during a recent trip to Taipei. He said Taiwan’s semiconductor industry is a strategic asset that’s “very vulnerable to invasion.”

“The window’s closing,” McCaul said about a US push to move the chips supply chain out of Taiwan. “We don’t have a whole lot of time.”

Taiwan’s concerns were described by people familiar with the government’s stance who asked not to be identified discussing private conversations.

The nervousness they described highlights the conundrum that Taiwanese officials face in maintaining the island’s role as home to 90% of the world’s advanced semiconductors, which power everything from smartphones to artificial intelligence chatbots, while also trying to attract the military and diplomatic support needed to deter an invasion.

China views Taiwan as its territory and a national security priority. Beijing has watched warily as President Tsai Ing-wen has said the self-governing island is essentially already an independent country, even if few nations recognize it as such, and as President Joe Biden repeatedly said the US would come to Taiwan’s defense if attacked.

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“The Taiwan question is the core of the core interests of China,” Chinese Foreign Minister Qin Gang said Friday at the opening of Shanghai’s Lanting Forum.

For Taiwan, the US warnings about the risk of attack have taken on new urgency amid signs that some investors are listening. They include billionaire Warren Buffett, whose Berkshire Hathaway Inc. cut its TSMC holdings by 86% in the fourth quarter over concern about tensions between China and Taiwan.

“I re-evaluated that part of it,” Buffett said in an interview with CNBC. “I didn’t re-evaluate the business, the management, or anything of the sort.”

Pressed on Taiwan’s concerns, a Commerce Department official, who asked not to be identified per agency policy, said the US will continue to work with allies including Taiwan to diversify and strengthen supply chains. That includes through increased investment and trade with Taipei, the official added.

In some ways, officials say, Taiwan’s government is a victim of its own success. Support for the island is now firmly bipartisan in Washington, with Republicans and Democrats accusing Beijing of a plan to have its military ready to forcibly take Taiwan as early as 2027.

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