CNAS strategy game examines how U.S., China respond to Taiwan semiconductor disruption

Washington, January 27— Essential to the day-to-day functioning of modern society, semiconductors are increasingly at the center of a high-stakes competition between the U.S. and China. Taiwan—already a flashpoint in this competition—accounts for 92 percent of the world’s most advanced chip manufacturing capacity. Control over Taiwanese semiconductor facilities and human capital would give China roughly half of global chip fabrication capacity and almost all state-of-the-art manufacturing capacity.

A virtual strategy game conducted by the Center for a New American Security, and detailed in a newly published report, has produced critical insights into the nature of U.S.-China strategic competition and global competition for semiconductors. Designed and conducted by the CNAS Gaming Lab, the exercise examined how China could influence Taiwan’s semiconductor industry and policy options that the United States and Taiwan could take to counter China’s predatory actions. The game featured three teams—the United States, China, and Taiwan—and envisioned a scenario in which a disruption created a global shortage in leading-edge chips.

“When the Chips are Down” was co-authored by CNAS Defense program fellow Becca Wasser, Technology and National Security program director Martijn Rasser, and research assistant Hannah Kelley. Key findings include:

• Taiwan seeks to remain the dominant global semiconductor manufacturer to maintain its “Silicon Shield,” which links Taiwan’s national survival and security to its technological preeminence in microelectronics.
• China is likely to use multifaceted gray zone tactics involving economic, political, informational, and military coercion to gain control over Taiwan’s semiconductor industry and complicate U.S., Taiwan, and multilateral responses.
• A misalignment of interests between the United States and Taiwan on how to secure semiconductor supply chains hinders policy coordination and creates opportunities ripe for exploitation by China.
• Unilateral actions by Taiwan or the United States are insufficient to stop China’s coercion of Taiwan, which will have significant impact on global semiconductor supply chains.

The report also recommends five actions the White House and Congress should take to protect critical semiconductor supply chains and better position the United States to counter Chinese coercive measures, including strengthening interagency planning to address China’s gray zone tactics, focusing on areas of shared cooperation with Taiwan, and bolstering bilateral and multilateral dialogues with stakeholders in the semiconductor industry.

For more information or to schedule an interview with the report authors, please contact comms@cnas.org.