President Trump has said that in his new administration, should he win the election later this year, the United States might not defend Taiwan if China invades, that is, unless Taiwan starts paying for US protection.
This has caused chip stocks in Taiwan to tumble, reports Reuters, with semiconductor investors factoring in the continued risk of lost sales to China over US export restrictions. However, President Trump's new comments about Taiwan are a basket of issues for investors and the world.
Throughout my time in the tech industry (close to 23 years now), Taiwan has become a major hub for virtually every technology product and brand. Apple, AMD, Intel, Microsoft, NVIDIA, Amazon, Google, Samsung, Sony, and countless others have their chips fabbed at TSMC in Taiwan.
If Taiwan were ever to be invaded, it would be by China, and it would bring the world to its knees. Recent comments from US Commerce Secretary Gina Raimondo said that if China seized TSMC, it would be "absolutely devastating" to the US economy.
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Since President Trump's remarks were made, Taiwan's Foreign Minister Lin Chia-lung said that Taiwan must rely on itself for defense, with increased spending and modernization of its military after multiple threats from China.
Taiwan has no formal defense pact with the United States, but Japan and South Korea do after Washington terminated a previous treaty the United States had with Taipei in 1979 when it switched diplomatic recognition to Beijing. Chey added: "I think everyone has a consensus on the main point, which is the China threat. In fact on national defence, we must rely on ourselves - this is the precondition. Since the start of Taiwan's democratisation over the past 30 years, we have stood alone against China's threat".
- Read more: China would drop NUCLEAR BOMBS non-stop on Japan if it defends Taiwan
- Read more: US Commerce Secretary: China seizing TSMC would be 'absolutely devastating' for US economy
Taiwan is moving at lightspeed to prepare, where the country is already reforming its military, as Lin pointed out, extending conscription to a year from 4 months. The country has made defense modernization a priority, including the development of its own submarines, with the Taiwanese government saying many times previously that the island's security rests in its own hands, especially in view of Taipei's diplomatic isolation.
Former US administrations have pushed Taiwan to modernize its military so that it would become a "porcupine" that makes it hard for China to attack. The administrations also pushed for the sale of cheap, mobile, and survivable "asymmetric" weapons that could outlast any initial assault by China's larger military.
Lin said: "We must be prepared to face a possible Chinese invasion, but we must be united. We hope that every day when Xi Jinping gets up in the morning, that even though he has a timetable for the future that he says 'not today'" for attacking Taiwan.