Silicon Shield: Can Taiwan’s Semiconductor Industry Deter China Amid Rising Geopolitical Tensions?

The global semiconductor value chain (GVC) comprises a complex network of interdependent actors. The relationship between economic interdependence and armed conflict is multifaceted. Liberal theorists assert that the opportunity costs associated with severing trade ties can deter conflicts, but this calculus is complicated by factors such as climate change, which may exacerbate conflict risks. Future uncertainties further undermine the reliability of opportunity costs as a conflict deterrent.

Asymmetry in interdependence, as noted by Keohane and Nye, can result in power imbalances. Such asymmetries may empower states through resource control, potentially leading to conflicts due to perceived shifts in power dynamics. Dale C. Copeland’s trade expectation theory provides a balanced perspective, recognizing that while economic benefits from trade can discourage conflict, dependence may also be exploited for coercion, rendering interdependence both a source of gains and risks. In the context of major and minor powers, semiconductors are critical resources akin to oil, likely to be restricted during conflicts. Such restrictions can foster negative expectations and trigger countermeasures, though they may not independently precipitate major conflicts. Alliances between major and minor ……………….