Foreign media: China does not need to defeat TSMC; it can weaken Taiwan's "silicon shield" by relying on mature processes

Taiwan has long been regarded as the core of the global semiconductor supply chain. TSMC’s control over a large share of advanced process capacity has fostered the concept of a “Silicon Shield,” serving as a strategic safeguard for Taiwan against geopolitical risks. However, foreign media point out that this “Silicon Shield” may face obsolescence amid intensifying U.S.-China tech competition, China’s massive investments in semiconductors, and various countries’ active efforts to reduce reliance on a single source of supply. Beijing does not actually need to defeat TSMC to render the “Silicon Shield” ineffective; it only needs to make its own economy less dependent on Taiwan’s advanced chips, which could weaken the shield.

The U.S. political and diplomatic magazine *The National Interest* first noted that Taiwan currently produces more than 90% of the world’s chips with nodes below 7 nanometers. These advanced chips are widely used in products such as artificial intelligence (AI) and smartphones. If Taiwan’s major wafer fabs were to halt operations for an extended period due to natural disasters or geopolitical conflicts, the impact would likely extend beyond the tech industry, potentially spreading to the automotive, consumer electronics, and global financial markets. A 30-day shutdown of Taiwan’s wafer fabs could result in global economic losses of up to $10.6 trillion.

For this reason, the United States, Europe, Japan, and South Korea have in recent years invested heavily to build their own semiconductor manufacturing capabilities, including the U.S. CHIPS Act, the EU’s Chips Act, and related subsidy policies in Japan and South Korea. However, while these countries aim to reduce dependence on Taiwan, they may merely shift their reliance to other key suppliers. Advanced semiconductor manufacturing still requires extreme ultraviolet (EUV) equipment from the Netherlands’ ASML, chemical materials from Japan, and design and software technologies from the United States, meaning the global supply chain remains highly concentrated.

In this semiconductor competition, China’s rise is more likely to alter the existing landscape. In the past, Western countries gradually shifted high-cost, low-margin chip manufacturing to Asia while retaining advantages in design and R&D. China, by contrast, views semiconductor manufacturing as strategic infrastructure, continuously expanding domestic capacity through government subsidies, tax incentives, and large-scale investments.

Especially after the United States strengthened export controls on advanced chips, China has further increased its investment in domestic production and R&D. Although China still lags significantly behind TSMC in the most advanced processes, its growth in mature nodes is quite rapid. By 2030, China is expected to become the world’s largest manufacturer of mature-node chips. In terms of mature processes such as 28 nanometers, China is projected to surpass the United States and Taiwan, controlling more than 30% of global capacity.

The report indicates that the key point is that China does not need to produce 2-nanometer chips to weaken Taiwan’s “Silicon Shield.” Automotive, home appliance, and mass-market consumer products do not use the most advanced chips, but rather mature-node chips such as those at 28 nanometers. If China can mass-produce mature-node chips that are sufficiently performant and competitively priced, and meet its own needs with domestic capacity, it can reduce its dependence on Taiwan’s semiconductors even if it still cannot catch up with TSMC.

This could become the greatest challenge to the “Silicon Shield” in the future. The previous logic was that China needed Taiwan’s chips, and Western countries also needed Taiwan’s manufacturing capabilities, so Taiwan’s importance in the global supply chain formed a strategic safeguard. But if China gradually establishes a complete supply system for mature nodes, this relationship of mutual dependence could change.

In the future, the global semiconductor market may gradually form two separate systems: one producing “sufficiently capable” mature-node chips in China, and the other maintaining cutting-edge technology among the United States, Taiwan, Japan, South Korea, and Europe, albeit at potentially higher costs. Countries’ massive investments in semiconductor self-sufficiency may not make chips cheaper; instead, they could drive up production costs.

For Taiwan, the real challenge may not be when China can produce 2-nanometer chips, but whether China can first establish a sufficiently robust independent supply chain for mature nodes such as 28 nanometers. As China gradually no longer needs certain chips from Taiwan, the mutual dependence on which the “Silicon Shield” relies may begin to loosen.

In other words, China does not need to defeat TSMC, nor even catch up with the most advanced processes. As long as it can make itself “no longer need Taiwan,” this “Silicon Shield,” originally seen as protecting Taiwan, may gradually lose its original power.