TCSS Security Commentaries #033

As Taiwan works to deter military threats, it should leverage its dominance in the global semiconductor supply chain as an economic component of its deterrence strategy.

Georg Tannen, Intern, TCSS

Source:  Foreign Policy

There has been recent debate about the effectiveness of Taiwan’s silicon shield and its existence. In theory, the silicon shield describes the concept that Taiwan’s hegemony in the semiconductor industry, through its indispensability to the global digital economy and its supply chain, would prevent the People’s Republic from invading Taiwan. According to market estimates, the global economy is highly dependent on Taiwan for semiconductor manufacturing: 65% of all semiconductors and more than 90% of high-end chips are produced in Taiwan. This theory is especially underlined by the unique market position of the world’s largest chip contract manufacturer, Taiwan Semiconductor Manufacturing Company (TSMC). Thus, the Taiwanese company was able to achieve a total share of 59% of the worldwide turnover of semiconductor foundries in the Q1 2023. TSMC offers currently the most advanced technology in 3-nanometer and will release 2-nanometer technology in 2025. Among many international plans such as the EU Chips Act, the U.S. Chips and Science Act, China Made 2025, and many others to invest massively in the industry to expand its own national as well as regional capacity, some experts argue that these investments in new fabs nevertheless cannot match any time soon the level of ingenuity that Taiwan’s unique semiconductor industry ecosystem offers the world due to its path dependency.

Former U.S. Deputy National Security Advisor Matt Pottinger has denied the existence of a silicon shield. Instead, he emphasized the danger of a “Leninist dictatorship” that used its own logic in weighing the costs of conflict. He remarked that some intellectuals in the People’s Republic view Taiwan’s dominance of the semiconductor industry as yet another justification for an invasion of Taiwan. Similar arguments were made by Chris Miller, “Chip War” author and Associate Professor of International History at Tufts University, who emphasized that a silicon shield won’t protect Taiwan from a Chinese invasion. The journalist Craig Addison, one of the pioneers in introducing the concept of silicon shield in 2000 and publishing the book ‘Silicon Shield: Taiwan’s Protection from Chinese Attacks’ the following year, commented on the effectiveness of Taiwan’s silicon shield: “Is there anything stopping Xi Jinping from taking Taiwan if hell bent on it? No, but the Silicon Shield has done its job by forcing world to sit up and take notice of a place that used to export pineapples. Taiwanese pineapple cakes are tasty, but they don’t make good shields!”

The Taiwanese government, aware of the growing threat from China and its plans for a takeover, has also recognized the power behind its semiconductor industry. President Tsai acknowledged the significance of the silicon shield in 2021 by stressing that it “allows Taiwan to protect itself and others from aggressive attempts by authoritarian regimes to disrupt global supply chains.” However, this emphasis on silicon shield should be understood in the context of the government’s overall strategy: the Quadrennial Defense Review (QRD) from 2021. The QRD, as the cornerstone of the defense strategy and military strategy and providing a vision for future development, suggests a military strategy of “Resolute Defense and Multi-domain Deterrence”. This military strategy is based on a strategy of asymmetric warfare and is described by experts as the “porcupine strategy”. It involves tactics for “evading enemy’s strengths and exploiting their weaknesses” by building “multi-domain strike capabilities”. The porcupine strategy is based on the assumption that China has the means to successfully attack Taiwan in the absence of allied support and emphasizes deterrence as a key element for Taiwan’s survival, as the recent CSIS tabletop exercises show.

The silicon shield should therefore be understood as a non-military but economic element of a deterrence strategy based on the basic assumption of the porcupine strategy. By reframing the silicon shield as a “silicon porcupine sting” it acknowledges the economic power that lies behind the semiconductor industry as well as being a key element of deterrence for the Taiwanese Government. The idea is also in line with the present National Development Plan 2021-2024, which identifies the semiconductor industry as one of six strategic core industries. More importantly, understanding the silicon shield as a silicon porcupine sting by being just one sting out of many, does not overstate the importance of the semiconductor industry in the decision-making of the Chinese leadership and helps to accept the reality that China wants to take Taiwan by any means necessary. Renaming the terminology of the silicon shield to the silicon porcupine sting would much better reflect Taiwan’s current overall strategy, as it emphasizes the need for deterrence and reliance on the alliance to defend the country. It additionally provides the potential to identify even more stings, for the government to expanded their porcupine strategy in non-military dimensions of deterrence, to become an even more ‘porcupine alike’ country.

Georg Tannen is an undergraduate student at the University of Münster, Germany where he majors in political science and philosophy.