(The Wall Street Journal, by Alexander Benard and David Feith, May 14, 2026)
Taiwan is no longer just a democratic outpost or a test of American credibility, but has become the physical center of the artificial intelligence production chain: thanks to TSMC, which manufactures 90% of the world’s most advanced chips, and the unique advanced packaging ecosystem (CoWoS), high-bandwidth memory integration, substrates, testing, and assembly, the island today represents the indispensable prerequisite for U.S. leadership in AI, without which America cannot win the decisive technological race of the century.
Treating Taiwan as a simple negotiable pawn in the Trump-Xi summit would be a grave strategic mistake: even with investments in Arizona and elsewhere, the United States cannot quickly replicate the Taiwanese “cluster” of expertise, production density, and know-how accumulated over decades, which enables rapid iteration cycles, high yields, and integration of logic chips with high-bandwidth memory necessary to train and operate frontier AI models.
Beijing knows this perfectly well: controlling Taiwan would mean having a choke point on the physical infrastructure of the AI era, with the risk of systemic crises even from coercive threats alone, while the United States must accelerate the transfer of production capacity onto American and allied soil but recognize that Taiwan’s autonomy remains essential for the coming decades.
Taiwan: Center of the Physical AI Supply Chain.
“AI does not live in the cloud but in factories, packaging plants, memory stacks, substrate lines, testing, and server factories. The geographic map of AI has its most important point, after America itself, in Taiwan.”
TSMC and Advanced Packaging Are Indispensable.
“TSMC manufactures about 90% of the world’s most advanced logic chips. But even this number underestimates the dependence: AI systems require advanced packaging like CoWoS, high-bandwidth memory integration, and chip-on-wafer bonding that today can only be done in Taiwan.”
U.S. Investments Are Still Not Enough.
“Facilities like TSMC’s in Arizona are an important down payment, but not a solution. The Blackwell wafers produced in Arizona still have to return to the Pacific for the advanced packaging that only Taiwan can do at scale.”
Control of Taiwan Would Give Xi a Huge Advantage.
“Xi understands that control over Taiwan would give Beijing both a military advantage and a choke point on the physical infrastructure of the AI era. It wouldn’t be necessary to operate every plant perfectly to throw the global AI ecosystem into crisis.”
Taiwan: Prerequisite for U.S. Dominance in AI.
“Until America can reproduce factories, packaging, testing, and supplier ecosystems comparable to Taiwan’s, Taiwan’s autonomy will remain indispensable to U.S. interests.”
(Excerpt from the newsletter by Giuseppe Liturri)
