China Simulates Attack on Taiwan in Show of Force

May 27, 2024

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The recent release of a video by the People's Liberation Army (PLA) of China showcasing a simulation of an all-out attack on Taiwan has sparked concerns and raised tensions in the region. The simulation, conducted by the Eastern Theatre Command of the PLA during a two-day military exercise named Joint Sword-2024A, comes in the wake of the inauguration of Taiwan's new president.

With Taiwan being a key player in the global supply chain, particularly in the production of semiconductors, an invasion of the island could have far-reaching consequences. Taiwan is home to TSMC, a leading foundry that produces 90% of the world's cutting-edge semiconductors. The simulated attack depicted the use of warships, warplanes, and missiles targeting several cities on the island, including the capital Taipei. Interestingly, the simulation did not appear to target Hsinchu, where TSMC has the majority of its fabs.

The escalation of tensions between Taiwan and China following the election of President Lai Ching-te has raised concerns among international stakeholders. Reports have emerged suggesting that Dutch chip-making equipment maker ASML and TSMC have taken precautionary measures in the event of an invasion. Bloomberg reported that both companies have the ability to remotely disable lithography machines in fabs, a move that could disrupt production in the event of a military conflict.

ASML has reportedly reassured officials about its ability to remotely disable the machines, and the Netherlands has conducted simulations to assess the risks associated with a potential invasion of Taiwan. Mark Liu, chairman of TSMC, emphasized the company's resilience, stating, "Nobody can control TSMC by force. If there is a military invasion, you will render TSMC factory non-operable." The restrictions on exporting the latest lithography equipment to China, imposed by the US and Dutch governments, further underscore the complexities of the situation.

The implications of the PLA's simulation and the responses from key players in the semiconductor industry highlight the delicate balance of power and technology in the region. As tensions continue to simmer, the international community watches closely, hoping for peaceful resolutions and stability in the Taiwan Strait.

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