CIA is said to have warned top tech executives as early as 2023 of economic crisis risk tied to China-Taiwan escalation

For years, the US government has sought to reduce its dependence on semiconductor imports from Taiwan. Taiwan-based TSMC manufactures around 90% of the world’s most advanced high-performance chips – critical components for smartphones, AI systems, data centers and military technology. Citing confidential sources, The New York Times reports that senior US technology executives were urgently warned in a classified security briefing as early as 2023 about a potential escalation involving Taiwan.

Military tensions between Taiwan and China are longstanding. Since the end of the Chinese Civil War in 1949, the People’s Republic of China has regarded Taiwan as a breakaway province and sees significant political and economic advantages in reunification. Should the conflict escalate, the geopolitical and economic consequences could be far-reaching.

As early as 2022, a confidential report by the Semiconductor Industry Association warned of the severe economic fallout such a scenario could entail. According to its estimates, a production halt in Taiwan could trigger the worst global downturn since the Great Depression. The New York Times further reports that US intelligence agencies briefed senior executives – including Tim Cook of Apple, Jensen Huang of Nvidia and Lisa Su of AMD. They were told that China could escalate military pressure on Taiwan by 2027 or even attempt an invasion, and were urged to prepare for that possibility.

Since then, the United States has stepped up efforts to reduce its reliance on semiconductor production in Taiwan. Washington launched multi-billion-dollar initiatives to strengthen domestic manufacturing. Former President Biden allocated around 50 billion dollars through the CHIPS Act to support the construction of new semiconductor plants in the United States, while President Donald Trump relied on tariffs and political pressure to push companies to shift production to the US. Still, the industry has remained cautious. Manufacturing in the United States is more expensive, and TSMC continues to maintain a clear technological lead.

In the meantime, new facilities are under construction in Arizona, backed by investments from TSMC, Intel, Nvidia and other technology companies. Even so, reliance on Taiwan remains significant. Critical steps such as advanced packaging are still largely carried out there. A complete decoupling is therefore considered unrealistic in the near term, meaning geopolitical risks are likely to persist for the foreseeable future.