Here’s a geopolitical nightmare scenario that keeps defense hawks and tech executives up at night: nearly 100% of the world’s advanced AI chips are manufactured in one place, Taiwan, by one company, TSMC. If China were to invade Taiwan, the global supply of the silicon brains powering artificial intelligence would essentially vanish overnight.
That’s the argument Elon Musk has been making with increasing urgency. In a March 2025 podcast appearance with Senator Ted Cruz, Musk laid out his case that the US needs to dramatically scale up domestic chip fabrication to protect its lead in the AI race.
The Taiwan problem
TSMC’s dominance in advanced chip fabrication is well documented. The company produces the overwhelming majority of the world’s most sophisticated semiconductors, the kind needed to train and run large AI models.
Musk told Cruz that the US would “likely lead in AI for the next few years,” but that leadership is contingent on one critical variable: who controls AI chip fabrication. A Chinese move on Taiwan wouldn’t just be a military crisis. It would be a technological one, severing access to the chips that underpin everything from cloud computing to autonomous vehicles.
