Semiconductors have become an integral part of almost every industry in developed economies. The production of these semiconductors is mainly concentrated in the Western Pacific region and for the highest level semiconductors almost entirely exists in Taiwan.
To assess the geopolitical implications of Taiwan’s semiconductor dominance, the authors conducted a tabletop exercise (TTX) with representatives from the executive and legislative branches of the US government and several semiconductor-based industries. The exercise showed that there are generally no good short-term options for responding to the disruptions to the global semiconductor supply chain that would result if China tried to merge with Taiwan.
The importance of semiconductors to the broader economy means that strategic competition must be broader in scope than its potential impact on military or political outcomes. Countries that can most easily withstand semiconductor capacity disruptions in Taiwan have an advantage in strategic competition. If the United States and its allies have this advantage, it can be a powerful deterrent to China’s actions against Taiwan. If China has the upper hand, it can act against Taiwan with less likely intervention by the US and its allies to mitigate its global economic risk.
In TTX, the United States never gained the upper hand and faced unfavorable outcomes in both peaceful and contested unification scenarios. This should be a call to action for the United States to evaluate options for increasing semiconductor manufacturing capacity.
Funding for this research was made possible by the independent research and development provisions of RAND contracts for the activities of federally funded research and development centers of the US Department of Defense. This research was conducted under the Naval and Marine Forces Program of the RAND National Security Research Division (NSRD).
This report is part of a series of RAND Corporation Research reports. RAND’s reports present research findings and objective analyzes addressing challenges facing the public and private sectors. All RAND reports undergo rigorous peer review to ensure high standards of research quality and objectivity.
This document and trademark(s) are protected by law. This RAND intellectual property presentation is provided for non-commercial use only. Unauthorized posting of this publication online is prohibited. Linking directly to this product page is encouraged. Permission is required from RAND to reproduce or otherwise use any of its research papers for commercial purposes. For information on reprint and reuse permissions, visit www.rand.org/pubs/permissions.
The RAND Corporation is a nonprofit institution that helps improve policy and decision-making through research and analysis. RAND’s publications do not necessarily reflect the opinions of its research clients and sponsors.