Semiconductor Concentration as Strategic Hostage: TSMC and the Bilateral Dependency Knot

Abstract

Semiconductor concentration in Taiwan constitutes the principal hostage geometry binding the US-China strategic competition, with TSMC operating as the chokepoint through which advanced chip production flows to both ecosystems. The concentration produces three-way mutual dependency: Taiwan depends on US security guarantee for sovereignty preservation, the US depends on Taiwan for advanced chip supply that domestic capacity cannot yet replicate, and China depends on Taiwan for chip access that sanctions architecture progressively compresses. The hostage geometry stabilizes the immediate strategic situation while creating substantial systemic vulnerability to disruption. The reindustrialization response operates through TSMC Arizona Phase 1 (operational at 4nm), Phase 2 (3nm targeted 2027), Phase 3 (2nm targeted 2029), Intel Ohio, Samsung Texas, and Micron New York buildouts, with the 2028-2030 window representing the critical capacity-shift period that determines whether the hostage geometry resolves through diversification or compression through compelled choice.