Gotta keep those phone processors and GPUs coming, folks

A US Senate committee has advanced a law bill that would provide billions in military support to Taiwan, the island nation that makes so many many of our chips and is being menaced by China.

The Senate Committee on Foreign Relations advanced the Taiwan Policy Act of 2022 on a 17-5 vote, Reuters reported, sending it to the full Senate for consideration. If signed into law, the bill would allocate $4.5 billion in military aid to Taiwan over four years and details economic sanctions that could be taken if China invades. 

"As China intensifies its threatening rhetoric and military aggression, it's imperative we take action now to bolster Taiwan's self-defense before it's too late," said Senator Jim Risch (R-ID), the ranking Republican member of the Foreign Relations Committee.

The bill would also re-classify Taiwan as a "major non-NATO ally," which would allow it to enter into additional military agreements and make it eligible to receive "excess defense articles," or US military surplus equipment. 

Passage of the bill out of committee doesn't mean it's bound to become law, and the Biden administration has signaled it's wary of supporting such an extreme change in relations over Taiwan.

China has increased its aggression toward the smaller country, which it considers part of Chinese territory. Last week the US publicly suggested the Middle kingdom learn from Russia's invasion of Ukraine before making any moves.

Taiwan's outsized role isn't getting any smaller

The Americans have expressed fears that a Chinese invasion of Taiwan would derail the world's economy because the country is responsible for more than 60 percent of the world's higher-end semiconductor chips. 

The United States has decided to inject billions of dollars into chip fabs built on home soil to lessen its reliance on foreign plants, though Taiwan is expected to dominate semiconductor manufacturing for the foreseeable future.

Terry Tsao, president of the Taiwanese arm of chip industry association Semi, told the South China Morning Post that Taiwan's semiconductor output would expand by 20 percent this year in order to catch up with production delays triggered by the COVID-19 pandemic.  

Speaking yesterday at the SEMICON Taiwan conference, Taiwanese President Tsai Ing-wen said the semiconductor industry was the cornerstone of Taiwan's economic development.

"The continued success of this industry comes in the face of unprecedented global challenges in recent times, including considerable uncertainty around supply chains. And even today, new challenges continue to arise, making the situation more volatile," Tsai said. 

Tsai implied Taiwan isn't considering giving up the lead in chip production, either. Instead, the Taiwanese President said her country was manufacturing 70 percent of chips under 7nm, and was advancing 2nm process nodes as well. Far from simply accepting a shift in chip production from Taiwan into the US and EU, Tsai said her government will continue to push for more domestic chip production despite pressure from China. 

"When it comes to the most advanced chips, Taiwan always leads the way," Tsai said. ®