The US Secretary of Commerce, Gina Raimondo, has said that a hypothetical Chinese invasion of Taiwan and seizure of TSMC would be “absolutely devastating” for the United States.

While refusing to speculate on how the events could potentially unfold, Raimondo told the House Appropriations Committee that “the United States buys 92 percent of its leading edge chips from TSMC in Taiwan,” meaning any disruption to that supply chain would have a significant impact on the US economy.

Gina Raimondo
Gina Raimondo – Gina Raimondo

Congressman Jake Ellzey added that around a third of the world's commerce travels through the South China Sea, going on to ask Raimondo if the reason the US imports so many of its chips from Taiwan was because the country was “two generations ahead of anything we can build here in the United States.”

Raimondo said that wasn’t true, explaining that TSMC was “vastly ahead of anything we’re doing in the United States” but said that as a result of the CHIPS Act funding the company was awarded last month, TSMC would soon be building its most advanced chips on US soil.

TSMC was awarded $11.6 billion from the US government under the CHIPS and Science Act in a funding package is made up of $6.6bn in grants and an additional $5bn in loans.

Under the terms of the agreement, TSMC will also construct a third factory in Phoenix, Arizona which will produce 2nm chips by the end of the decade. The chip manufacturer is already constructing two plants in the state that will produce 4nm and 3nm semiconductors.

Apple is also reportedly working with TSMC to develop its own AI data center chips.

Earlier this week, the Department of Commerce revoked some export licenses from Intel and Qualcomm which had allowed the vendors to supply Huawei with certain semiconductors.

Referring to the decision, Raimondo told the committee that she couldn’t comment on specific license revocations, but that the government position is that Huawei is "a threat.”

She said: “As we get more data about our threats, we make changes, we tighten the screws, including revoking licenses that have been previously given."

While the discussed invasion remains hypothetical, there have long been concerns that China could attempt to reunify the sovereign state of Taiwan with mainland China, with the Chinese government officially regarding the country as a breakaway province.

In 2022, it was reported that the number of Chinese military jets flying into Taiwan's air defense zone had hit record highs.

In May of that same year, a speech given by Chen Wenling, chief economist for the China Center for International Economic Exchanges, saw him warn that should Russian-style sanctions be imposed on China by the US and allies, China "must recover Taiwan" and "seize TSMC, a company that originally belonged to China."

US military academics have previously suggested that if China invades Taiwan, the country should instigate a ‘scorched earth policy’ and destroy its own semiconductor foundries in order to make itself a less useful and attractive target.