The CIA warned technology companies in 2023 that China could attempt an invasion of Taiwan before 2027, reports The New York Times.

Why Taiwan matters

About 97 % of advanced microchips are produced in Taiwan, creating a concentrated point of vulnerability for global supply chains.

If the island were blockaded or its production facilities destroyed, global electronics manufacturers and downstream industries could face extended shortages and higher costs.

Briefings to industry

In 2023 the CIA briefed Apple, Nvidia and AMD to encourage diversification away from Taiwanese production, according to The New York Times.

The purpose of those briefings was to prompt companies to reduce geographic concentration and to explore alternative suppliers and manufacturing locations.

Economic and strategic implications

• Supply disruptions: prolonged interruptions in Taiwanese chip output could stall consumer electronics and industrial production worldwide for months.
• Price volatility: shortages would likely push component and finished-goods prices higher, squeezing margins across multiple sectors.
• Strategic shifts: firms may accelerate investments in alternative fabs, regional partnerships, and inventory buffers to mitigate future disruptions.

Foundries such as Taiwan Semiconductor Manufacturing Company supply much of the worlds leading-edge processors used in AI accelerators, smartphones and other advanced devices.

Sectors reliant on advanced semiconductors — including cloud computing, automotive electronics and defense systems — would be particularly sensitive to prolonged supply interruptions.

Responses and outlook

Governments and companies have been pursuing policies and investments to onshore or ally-shore chip production and to strengthen supply-chain resilience.

The CIA briefing highlights how geopolitical tensions intersect with concentrated semiconductor manufacturing, prompting strategic adjustments across the industry.