The Global Economy’s Weak Spot....?

According to John Thornhill, writing in the Financial Times, too many countries depends too much on Taiwan for high-tech semiconductor chips.

Most of us don't spend that much time thinking about computer chips...

Unless your phone’s acting up or your laptop crawls, why would you...?

Unless you want to clue yourself up about this crucial tech which underpins so much our daily lives. Silcon Chips are everywhere now. They run AI, keep smartphones ticking, power military hardware, drive electric cars, handle medical devices, push money around the banking system, and operate the most basic appliances.

And almost all the really advanced chips on the planet come out of Taiwan.

A Small Island, Big Leverage

Apple, Nvidia, and many other tech giants rely almost entirely on Taiwanese factories. Taiwan Semiconductor Manufacturing Company (TSMC) has cornered the market: they are able to make the sort of chips that no one else can mass produce, at least not yet.

And of course there's an obvious vulnerability here: China. When it does annexe Taiwan, I don't think this is an if, this could seriously disrupt our supply of semi-conductors.

This is of course one of the downsides of chasing efficiency in a global market, it can lead to these kind of vulnerabilities.

And this situation really exposes the cracks in globalism....

For ages, economic logic was dead simple: let markets decide where stuff gets made. If Taiwan can crank out chips for less money and higher quality, then it makes sense to send production there.

Until, of course, it doesn’t.

The world economy has gotten hooked on “just-in-time” supply chains. Companies keep fewer parts in stock and trust trade to stay smooth. That saves money when everything works—but the minute it doesn’t, the system basically falls apart.

Covid proved that vulnerability. The war in Ukraine showed a different kind of risk. And Taiwan is shaping up to be the biggest of all.

Plus, here’s a weird irony: globalisation was supposed to make countries friendlier and economies safer. Instead, every time nations become reliant on a key resource from one place, that place gains outsized power—and tension gets worse.

How to make the system safer>?

The U.S. is pumping billions into its own chip factories with the CHIPS Act. Europe’s trying similar moves. Even Britain is throwing around phrases like “economic resilience” and “supply chain security.”

The problem is that building a chip plant isn’t something you do overnight. It costs billions, takes years, and demands expertise that isn't easily found here in the UK.