Joseph V. Micallef is a best-selling military history and world affairs author, and keynote speaker. Follow him on Twitter @JosephVMicallef.
Geopolitics is the study of how a nation's geography and geology shape its domestic and international politics. Thus, the U.S., which is shielded by oceans on both its east and west coasts, evolved differently from, say, Germany, which was surrounded by potential enemies.
Geopolitics helps explain why Switzerland, a largely mountainous country, could opt for a strategy of neutrality, while a country such as Poland, which is relatively flat and subject to invasion, could not.
Natural resources are another factor that can profoundly shape a nation's geopolitical posture. For example, many nations in the Persian Gulf -- blessed, although some would call it cursed, by a cornucopia of oil and natural gas -- found that their hydrocarbon wealth shaped not just their own geopolitical posture but that of other countries that were dependent on continued access to those resources.
Technology isn't typically thought of as an element of geopolitics. Technology and the people who develop it are highly mobile and can easily be transferred around the world. Consider that Apple's iPhone is designed in California but assembled in the People's Republic of China, utilizing components that are mostly drawn from the U.S., Taiwan and South Korea.
This phenomenon is particularly true of semiconductors. Considered the building blocks of the modern electronic age, many are designed in one country, assembled by contract manufacturers elsewhere and end up in electronic goods produced all over the world. The high value to weight ratio of semiconductors means that they can be shipped economically across the globe.
There are instances, however, when a nation's or region's technological infrastructure and capabilities can have geopolitical significance. During the Cold War, for example, the U.S. committed itself to the defense of Europe from Soviet aggression, in part because Washington recognized that if Western Europe fell under Moscow's control, the region's economic and technological capabilities would tip the U.S.-Soviet balance of power dramatically to the latter.
Today, the U.S. finds itself in a far-ranging economic, political, military and technological competition with China. Surprisingly, Taiwan may well play a role in the growing Sino-American rivalry similar to Europe's during the Soviet-American Cold War.
The U.S. and Semiconductors
From the development of the transistor in the mid-20th century, the U.S. has dominated the semiconductor industry. American companies have usually been on the cutting edge of new designs and historically dominated their manufacture.
During the Cold War, the U.S. restricted the export of advanced semiconductors to the Soviet bloc. It even went as far as restricting the export of consumer goods that incorporated those chips. That strategy has not changed.
The Trump administration, for example, sought to curb the growth of Chinese telecommunications giant Huawei by banning its access to semiconductors that were based, in whole or in part, on American intellectual property. Given the wide-ranging role that U.S. companies have played in the semiconductor industry, that prohibition effectively cut Huawei off from chips that were critical to its telecommunications equipment.
Beijing has targeted the semiconductor industry as one of the industrial pillars that it wants China to dominate to fulfill the long-term economic, political and cultural transformation that it calls the "China Dream." New, advanced semiconductors will be at the heart of emerging technologies such as quantum computing, remote driving vehicles and artificial intelligence, and will drive the post-5G advances in telecommunications.
Significantly, in 2020, the global market capitalization of the semiconductor industry exceeded that of the energy sector for the first time. That fact may just be an interesting coincidence or it may be that financial markets are signaling that semiconductors have supplanted oil as the key commodity of the 21st century. If so, this development will have far-reaching geopolitical ramifications.
Given the historic American domination of the semiconductor industry, the fact that semiconductors will be one of the battlefields of Sino-American competition would augur well for the U.S.
There is a significant catch, however. While the U.S. remains a key player and an important source of innovation in the semiconductor industry, it no longer has the overwhelming dominance it once did.
Several months ago, Intel, a U.S. company that has dominated the semiconductor industry for the last half century, announced that it would not be able to mass produce 7 nanometer (nm) chips until 2023. That put Intel 18 months behind its previously announced schedule.
More significantly, Taiwan Semiconductor Manufacturing, or TSM, Taiwan's largest semiconductor manufacturer, is not only already producing 7 nm chips but announced that it would begin manufacturing 3 nm chips by 2022. Samsung, the South Korean conglomerate, is not far behind. That puts Intel several years behind TSM. In 2020, roughly one-third of TSM's revenues will come from its 7 nm chips; 7 nm chips are at the heart of the next 5G-enabled generation of cellphones and figure prominently in the Apple iPhone 12.
Recognizing the importance of that development, the Trump administration has urged TSM to set up a fabrication plant in the U.S. In May, TSM announced that it planned to build a $12 billion manufacturing facility in Phoenix, Arizona.
In the space of several months, Intel's market capitalization fell by a third, while that of TSM doubled. TSM's market capitalization is now more than double that of Intel's. Historically, the opposite was true.
China, the U.S. and Taiwan
Beijing has been clear that it considers Taiwan an integral part of China and that the island will eventually be reintegrated politically.
The tone of its pronouncements on unification have varied from relatively mild and conciliatory statements that unification will be peaceful and that Beijing is prepared to wait a long time until this is achieved to more aggressive threats that China is prepared to use military force to accomplish its aim. Over the course of the last year, Beijing's statements on eventual unification have become increasingly belligerent.
The Davis line, the median line that divides Chinese and Taiwanese territorial waters and airspace in the Taiwan Strait, was demarcated in the 1954 U.S.-Taiwan Mutual Defense Treaty. It's named after Brig. Gen. Benjamin O. Davis Sr., the first head of U.S. Air Force's Air Task Force 13 in Taiwan. Davis was the commander of the World War II Tuskegee Airmen.
From 1959 to 1999, there were no incursions of People's Liberation Army Air Force planes into Taiwan's air defense zone. Between July 1999 and August 2020, there were four such incursions across the Davis line. Since Sept. 1, 2020, there have been more than 40 incursions by 19 combat aircraft.
The U.S.-Taiwan relationship is particularly complex. The U.S. ended its formal diplomatic recognition of Taiwan as the legitimate government of China in 1979. Since then, the relationship, as set out in the 1979 Taiwan Relations Act, has been unofficial and informal. Although the U.S. and Taiwan formalized existing consular relations on Sept. 13, 2019, neither country maintains an official embassy in the other or appoints an ambassador.
In the U.S., Taiwan is represented by the Taipei Economic and Cultural Representative Office in Washington, D.C., while the U.S. is represented in Taipei by the American Institute in Taiwan. The two offices function as de facto embassies, even though they lack any official diplomatic designation.
Washington's ambiguity toward Taiwan is in part in deference to Beijing's insistence that Taiwan is legally part of China. It also leaves unclear, purposely for deterrence reasons, how the U.S. would respond in the event of a Chinese invasion of the island.
The U.S. no longer has a formal defense treaty with Taiwan. It is under no obligation to come to Taiwan's defense in the event it is invaded. Nonetheless, it is widely assumed that the U.S. would intervene militarily in the event the island was attacked, and its willingness to do so is seen as proof of its intent to uphold its treaty obligations to defend Japan or South Korea should they ever be threatened by a belligerent state.
Per the 1979 Taiwan Relations Act, the legal framework for U.S.-Taiwan relations since Washington recognized Beijing as the legitimate government of China, in Washington's view:
"Any effort to determine the future of Taiwan by other than peaceful means" would be considered "a threat to the peace and security of the Western Pacific area and of grave concern to the United States."
Additionally, the U.S. has continued to be Taiwan's principal arms supplier; a role that creates ongoing frictions with the Chinese government.
Taiwan's emergence as a semiconductor manufacturing and development powerhouse magnifies the significance of Taiwan in the Sino-American relationship.
The continued development of the island's semiconductor industry could, potentially, erode the ability of the U.S. to use its historic dominance of semiconductor design and manufacturing to slow down and constrain China's technological development.
Unfettered Chinese access to Taiwan's semiconductor industry would be a major impetus to Chinese aims to dominate the global semiconductor industry. That possibility also makes the issue of reunification with Taiwan even more important to Beijing.
China may also try to link U.S. arms sales to Taiwan to other, broader issues of Sino-American relations. Beijing, for example, may offer to increase its imports of American goods or to cut, or at least slow down the growth, of its greenhouse gas emissions in return for an American moratorium on arms sales to Taiwan or a ban on the sale of advanced weaponry such as the Lockheed Martin F-35 Lightning II multirole combat aircraft.
Conversely, as Taiwan grows in importance to the U.S., so too will Washington's willingness to supply Taipei with state-of-the-art weaponry and possibly even expand, if not formalize, its present informal military cooperation. Those developments will further antagonize Sino-American relations and further stoke Beijing's public belligerence toward the island.
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