Key highlights
- Taiwan is central to advanced chip supply; CRS notes ~90% of global advanced chip production is based in Taiwan (and linked to leading foundry capacity). congress.gov
- The risk isn’t just “chips shortage”—it’s cascading disruption to downstream manufacturing. USITC work models U.S. exposure to a Taiwan disruption. USITC
- In 2026, companies are pricing “resilience” like insurance: multi-sourcing, inventory strategy, and geography diversification.
What makes Taiwan a chokepoint
The semiconductor chain is globally distributed, but advanced manufacturing concentration creates a brittle point. CRS summarises Taiwan’s role across the value chain and highlights the advanced production concentration. congress.gov
How the risk shows up in real life (not headlines)
- Lead times explode for critical chips.
- Auto, electronics, industrial equipment face production stops.
- Inflationary pressure appears via supply constraints.
USITC analysis focuses specifically on U.S. vulnerability and downstream impacts from a hypothetical disruption. USITC
What businesses should do (2026 playbook)
- Map your “chip dependency” to part numbers, not generic categories.
- Diversify where feasible (qualified alternates, second-source designs).
- Contract for priority allocation (yes, it costs money; so does downtime).
- Stress-test your inventory policy: the cheapest inventory is not always the smartest.
Small questions people search
“Can’t other countries replace Taiwan quickly?”
Not quickly at the advanced end. Capacity buildouts take years, tooling is specialised, and qualification cycles are slow.
