Chip War: The Fight for the World's Most Critical Technology

by Chris Miller

Zhao’s real interest was in buying the island’s crown jewels—MediaTek, the leading chip designer outside the U.S., and TSMC, the foundry on which almost all the world’s fabless chip firms rely. He floated the idea of buying a 25 percent stake in TSMC and advocated merging MediaTek with Tsinghua Unigroup’s chip design businesses. Neither transaction was legal under Taiwan’s existing foreign investment rules, but when Zhao returned from Taiwan he took the stage at a public conference in Beijing and suggested China should ban imports of Taiwanese chips if Taipei didn’t change these restrictions. This pressure campaign put TSMC and MediaTek in a bind. Both companies were crucially reliant on the Chinese market. Most of the chips TSMC produced were assembled into electronics goods in workshops across China. The idea of selling Taiwan’s technological crown jewels to a state-backed investor on the mainland made little sense. The island would end up dependent on Beijing. Besides abolishing its military or welcoming occupation by the People’s Liberation Army, it was hard to think of a step that would do more to undermine Taiwan’s autonomy.