by Martin Armstrong, Armstrong Economics:
Semiconductor chips were the main topic at an adjacent conference in the Hilton Bonnet Creek this week. An employee of mine spoke with one attendee who said shareholders were concerned that their manufacturing headquarters were located in Taiwan. Should they be concerned?
I’m told the general consensus was that even in the event of China following through with its One China policy, the company believed that China would not want to lose such a lucrative business deal with the United States.
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I hate to be the bearer of bad news, but the United States is not the only nation lining up to purchase chips. Most tech companies NEED those semiconductor chips and the world never truly recovered from the shortage a few years ago. This particular company produces top-tier chips and there is an extremely high demand for them. People will pay top dollar.
Look at what happened in Russia. We are still purchasing Russian oil but through third party nations like India who turn around and sell it at a premium. Energy is more expensive for everyone in the West now. China could implement retaliatory tariffs for the US and anyone else disobeying the One China policy and China is strategic enough to know that cutting off the West’s supply of semiconductors would be a economic blow.
Socrates accurately predicted Taiwan’s election results earlier in the year and we saw a direction change back in January. Taiwan’s new President Tsai Ing-wen is the most outspoken Taiwanese leader against the One China policy. He has been deemed a threat by the Chinese government. The neocons have said they will defend Taiwan to the end, while China has reiterated that any attempt to interfere in its affairs will be met with severe consequences.
Tsai Ing-wen is eager to strengthen relationships with the US by producing more semiconductor chips. The US set aside funds specifically to build up domestic manufacturing, but shortages remain a serious problem.
“In the face of authoritarian expansionism and the challenges of the post-pandemic era, Taiwan seeks to bolster cooperation with the United States in the semiconductor and other high-tech industries. This will help build more secure and more resilient supply chains. We look forward to jointly producing democracy chips to safeguard the interests of our democratic partners and create greater prosperity,” Taiwan’s president stated.
Taiwan’s growing relationship with America is fanning the flames of war. The nation’s entire military strategy relies on superpowers like America shielding it from China. Our adversaries see that we are wearing ourselves thin and striking will be far easier than before.
It remains to be seen how relations will pan out with Trump at the helm. We all remember the infamous US-China trade war under his first administration where both nations needlessly slapped on tariff after tariff. Let’s also remember that it will not be easy for Taiwan to export anything if there is war in the Indo-Pacific. Is made in Taiwan a safe bet right now from a Western perspective? Unfortunately, the answer is no.
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