What would happen if TSMC was suddenly destroyed?

By Darren Chen

Taiwan Semiconductor Manufacturing Company (TSMC) is a Taiwan-based company that makes chips in phones, computers, etc. Started in 1987, it has evolved to be one of the world’s largest chip manufacturers. Used in military and civilian use, TSMC is one of the most important companies now in an era dominated by technology. 

TSMC is a company making 90% of the world’s most advanced chips, building chips for big companies such as Apple, AMD, Nvidia, and many more, according to CNBC, making them vital for modern electronics to function. Additionally, TSMC’s dominant role as an advanced chip manufacturer also makes it a leader in the research and development of future technology. TSMC’s job also comes in geopolitical significance, promoting trade and relations with other countries interested in their products, making it one of the, if not the most important companies in the modern day.

But what if they were suddenly wiped off the face of the world?

The sudden destruction of TSMC would be catastrophic. The production of advanced chips would be cut by 90%. Technology that previously relied on them would need to look for other chips, not as advanced, proving a setback in technology. The absence of TSMC’s research would put a halt on the development of more advanced chips and cause a stop in technological innovation. Without the leading manufacturer of computer chips, companies like Apple and Nvidia would be left without their most important component. Unable to manufacture their products that are in high demand would cause harm economically, as no one can buy their products. Most importantly, as AI becomes increasingly popular, the demand for advanced chips will rise. Without the production of advanced chips from TSMC, AI development would most likely be halted or slowed, as companies try to fill in the hole left by this most essential company. 

The absence of TSMC would affect many countries, as many of them rely on their advanced chipmaking capabilities. For example, the United States is dependent on TSMC to produce many of the computer chips used in most of their technology, according to the U.S. Department of Commerce. Things such as cars, phones, and many AI servers are created in the US with the help of this technology. Without TSMC, no other company other than Samsung could manufacture these chips which would leave millions of devices without their most important component. Additionally, many countries including Japan, South Korea, India, and European countries also depend on TSMC for their chips for similar products, according to TSMC.

However, the absence of TSMC would come with some positives. Other companies such as Intel and Nvidia would quickly try to research and develop more advanced computer chips, trying to fill the gap that TSMC left, as both are easily in the top 10 of the biggest chip manufacturers, as explained on Investopedia. This could potentially create even more advanced chips, as bigger companies would be involved in the research to get a competitive edge. However, this process takes time, and it would likely be years before companies catch up with current technology. It would take large amounts of money for research and lots of people in order for these companies to match the work quality of TSMC. 

Unfortunately, anything can happen to potentially destroy TSMC. Considering Taiwan’s location as an island on the Pacific Ring of Fire surrounded by great bodies of water–one big natural disaster could cause TSMC harm and possibly make it collapse. For example, recently in April 2024, Voice of America reported on a string of strong earthquakes that struck Taiwan, started off by a 7.2 magnitude earthquake, causing severe damage to the country’s infrastructure, which could have put TSMC out of commission. Luckily, TSMC came out relatively unscathed.  Additionally, China’s claim of Taiwan as its own territory poses a threat to TSMC and the country, as war with such a large military would certainly lead to a negative outcome. Given all these risks, the loss of TSMC is a real and daily possibility.

The loss of TSMC and its products would immediately cut off the world’s access to the valuable advanced chips they manufacture. Countries and companies worldwide would be affected as they search for an alternative, which would take time and resources.