The White House warned Apple, Nvidia, and AMD that Taiwan could be invaded by China in 2027

We all know that the big tech companies are American: IBM, Nvidia, AMD, Apple, Google, etc. But the question is not where their headquarters and offices are located, but where their raw materials come from. In this case, their chips, processors, SoCs, and other silicon-based production. And here all the companies share the same supplier: companies from Taiwan.

Well, in a new research report from The New York Times, we read that in July 2023, senior U.S. intelligence officials privately informed some of the most powerful executives in the tech industry about classified information related to China and Taiwan.

The U.S. could not afford that scenario

According to reports, among the attendees were Apple CEO Tim Cook; Nvidia CEO Jensen Huang; AMD CEO Lisa Su; and Qualcomm CEO Cristiano Amon.

According to the report, CIA Director William J. Burns and National Intelligence Director Avril Haines informed executives that the increase in China’s military power suggested that Beijing could be prepared to act on Taiwan in 2027.

And if this is not new, the U.S. has always feared this scenario; what was new is the extent to which the U.S. government explicitly raised that risk to the companies most exposed to it.

Taiwan produces approximately 90% of the world’s most advanced semiconductors, primarily through Taiwan Semiconductor Manufacturing Company, or TSMC. A blockade or invasion would immediately disrupt global chip supply chains, with ripple effects on consumer electronics, artificial intelligence infrastructure, automobile manufacturing, and defense systems.

The backdrop of these informational meetings was the Biden administration’s push to repatriate semiconductor manufacturing through the CHIPS Act, followed by the more aggressive use of tariffs (or the attempted use, in any case) by the Trump administration to force changes in procurement. Warnings from intelligence services were part of a broader effort to convince companies that geopolitical risk was no longer theoretical.

The research highlights the internal frustration of the Government due to the fact that market incentives alone have not been sufficient to significantly reduce Taiwan’s dependence. The creation of cutting-edge capacity in the United States has proven to be costly and slow.

The United States could lose more than 11% of its GDP

Even in cases where new manufacturing plants are being launched in Arizona and Texas, advanced packaging capabilities continue to be concentrated in Taiwan, which means that some chips manufactured in the United States still require critical finishing steps abroad.

For the tech sector, the fundamental issue is simple but harsh. If Beijing acts on Taiwan and manages to disrupt semiconductor exports, the immediate economic impact would likely overshadow the financial crisis of 2008.

A study commissioned by the industry in 2022, cited in the report, projected an 11% drop in U.S. GDP in a scenario of severe disruption in Taiwan, and it is believed that with the AI boom, the decline could be even greater.