Computer chips, also called microprocessors and semiconductors, are the lifeblood of the modern economy and indispensable for Artificial Intelligence-based businesses. The importance of computer chips to the modern economy is analogous to the importance of oil to the World War II economies of 1939—the Axis powers of Germany and Japan conducted invasions specifically to secure more oil.
On August 6, 2025, Donald Trump announced a 100 per cent tariff on computer chips manufactured outside the US. While some may dismiss this move as a haphazard Trump move, it is actually a signal to China and a bellwether of a possible war over Taiwan.
Trump’s statement allows an exemption for companies that move manufacturing to the US. This is, in fact, a signal to Taiwan’s largest company, Taiwan Semiconductor (TSMC), to begin moving its most advanced manufacturing technology to the US. All of the world’s most advanced AI chips are manufactured by TSMC, especially chips for the $4 trillion giant Nvidia.
On August 7, 2025, Trump called on Lip-Bu Tan, the CEO of US chipmaker Intel, to resign after Republicans raised concerns about possible ties to the Chinese military.
These two back-to-back announcements are linked to Trump’s strategy to defend computer chip supplies for the US. Once advanced manufacturing is moved from Taiwan to the US, any moves by China on Taiwan will not jeopardise the US economy by cutting off America’s chip supply.
China has a stated goal of taking Taiwan by force if necessary by 2027, and US Secretary of Defense Pete Hegseth claims the Chinese military is training to achieve this goal. China has several options to force Taiwan to submit to Chinese rule, including a naval blockade or a full-scale invasion.
Trump’s chip tariff can, in my opinion, be interpreted as preparation for such a conflict by forcing more manufacturing to move to US soil. If the US achieves self-sufficiency in chip manufacturing, it would be less vulnerable to a war with China over Taiwan.
China has two active aircraft carriers and 787 ships in all in its navy. Together with the People’s Liberation Army Rocket Force, which is the largest ground-based missile force in the world, Taiwan could easily be blockaded or bombed into submission unless the US military intervenes to save it.
Such a war has a risk of spiralling into World War III in the event that Iran, Russia and North Korea enter the conflict by attacking US interests around the world. Israel, Japan, Australia and the NATO alliance would also be dragged into the war if it escalates, making it the first global conflict since Adolf Hitler kicked off World War II in 1939.
Microprocessors are also critical for modern militaries, as smart bombs, drones and aircraft all need processors to function. AI is also becoming a critical component of the US and Chinese militaries. Inevitably, the nation that has the best and most numerous supply of microprocessors will gain a military edge in deploying AI to manage the battlefield.
The US was once the world leader in microprocessor production, but it fell behind in the last decade. The American company Intel invented the first microprocessor, the 4004, in 1971 and dominated microprocessor manufacturing until a period between 2014 and 2019, when they were stuck on an ageing 14nm manufacturing process and rival TSMC, based in Taiwan, started mass producing chips for Intel’s rivals on a superior 7nm process.
Microprocessors increase in speed due to advanced processes which allow more transistors to be shrunk down to fit onto a chip. The first microprocessors in the 1970s had only 2,300 transistors, while modern chips fit over eight billion transistors by dramatically reducing the size of each transistor. All of the world’s most advanced microprocessors are produced exclusively on Taiwanese soil by TSMC, putting the entire global supply chain for AI and high-performance computing at risk in the event of a war.
The Government of T&T, and large companies based here, should take precautions against the possibility of a war that cuts off the supply chain of ICT hardware. Banking systems and ATMs are all digital, and replacement parts for these systems may be unavailable in the event of a conflict. Our oil and gas sector relies on control systems that use microprocessors, which may also be in short supply during a conflict.
During any conflict, both China and the US will engage in high-level cyber warfare, releasing computer viruses and attacking servers and service providers that T&T may rely on. It may be wise for the T&T Government to invest in its own data centre on local soil as a backup for critical information, in the event that the cloud storage that different government ministries and the Judiciary rely on is taken out by cybersecurity breaches.
Food security is also essential, as any large-scale conflict will disrupt food exports from the US. Citizens are advised to keep a stocked pantry and plant a vegetable garden just as our forefathers did during World War II.
