By
Emily Carter
Research Fellow, Infrastructure Geopolitics
May 23, 2026
The Taiwan Strait represents one of the most consequential geopolitical risk concentrations in the global economy. Taiwan’s role in the global semiconductor supply chain is without meaningful parallel. The island produces the overwhelming majority of the world’s most advanced logic chips, and the facilities that manufacture them represent decades of accumulated technical capability, equipment investment, and workforce expertise that cannot be replicated quickly under any circumstances.
For industrial organizations, manufacturers, and infrastructure operators whose products and systems contain advanced semiconductors, the geopolitical stability of the Taiwan Strait is an operational variable that belongs in enterprise risk discussions at the highest level.
The Concentration Problem in Concrete Terms
Advanced semiconductor fabrication is concentrated in Taiwan not by accident but as the result of sustained national investment in technical education, manufacturing infrastructure, and industrial policy that took generations to produce. The leading manufacturer of advanced logic chips produces components that are embedded in virtually every category of modern industrial, defense, and consumer technology. There is no second source of equivalent capability operating at commercial scale. This concentration creates a supply chain vulnerability with no near-term remedy.
A significant disruption to semiconductor production in Taiwan, whether caused by military conflict, blockade, natural disaster, or critical infrastructure attack, would propagate through dependent industries within weeks and produce shortages that would persist for years given the lead times required to establish alternative fabrication capacity.
The Mapping Imperative
Many organizations know that their products and operations depend on semiconductors. Far fewer have mapped the specific chip families, fabrication sources, and supply chain nodes that their most critical dependencies flow through. This distinction matters enormously. Generic awareness of semiconductor dependency does not support actionable risk management. Precise knowledge of which specific components come from which specific facilities does.
Executive leadership should direct their supply chain teams to produce this mapping and to identify which dependencies carry Taiwan Strait exposure, which have alternative sources, and which are effectively irreplaceable on any reasonable planning horizon.
Inventory, Qualification, and Design Strategy
Organizations that have conducted honest Taiwan Strait exposure assessments are pursuing a common set of responses. Strategic inventory positions for critical components, accelerated qualification of alternative chip suppliers where they exist, and design-for-resilience programs that reduce dependency on single-source advanced chips are the primary levers available. None of these responses eliminates exposure. All of them reduce it.
The Policy Environment
Government investment in domestic and allied-nation semiconductor fabrication capacity through initiatives in the United States, Europe, Japan, and South Korea is the long-term structural response to this concentration risk. The timelines for these investments to deliver meaningful advanced chip capacity are measured in years. In the interim, the concentration risk in Taiwan remains, and organizations that have not prepared for disruption scenarios are carrying an exposure they have not formally acknowledged.
By Emily Carter • Non-Resident Fellow, Infrastructure Geopolitics
The Council on Critical Infrastructure (CCIC) provides strategic analysis and executive guidance on emerging risks to industrial, energy, and critical infrastructure sectors.
