Ken Griffin: US in trouble if China seizes Taiwan semiconductor industry
Citadel CEO Ken Griffin is concerned about America’s dependence on Taiwan’s semiconductor industry and that US restrictions on sales of advanced computer chips to China could make an invasion of Taiwan more tempting for Beijing.
America is “totally and completely dependent on the Taiwanese for advanced semiconductors,” the billionaire hedge fund chief said at the Bloomberg New Economy Forum in Singapore this week. “The United States is unable to produce anywhere near the number of semiconductors it needs to fuel its economy.”
If China invades Taiwan and seizes its semiconductor industry, it would cause major problems in the US economy, he said. China regards Taiwan as its own, but the latter operates as an independent democracy and has never been controlled by Beijing.
“If we lose access to Taiwanese semiconductors, the US GDP collapse is likely to be in the range of 5% to 10%,” he said. “It’s an imminent Great Depression.”
The likelihood of this scenario is anyone’s guess, but Griffin believes recent U.S. restrictions on sales of advanced semiconductors and equipment to China amount to America “playing with fire.”
“One can argue that by denying the Chinese access to semiconductors, we increase the risk that they will take Taiwan,” he said.
In October, the Biden administration introduced sweeping export controls, declaring that US companies cannot sell advanced semiconductors or equipment used to make newer chips to China. It added that foreign firms could not sell advanced semiconductors to China if the chips were developed using American-made technology, software or equipment.
Later that month, Chinese President Xi Jinping emphasized the need for technological “self-sufficiency,” and used the phrase at least twice in his speech at the 20th party congress in Beijing. He never mentioned it in his 2017 speech.
China has prioritized the development of artificial intelligence, for which it needs advanced semiconductors. The Brookings Institute warned in 2020 that “Chinese advances in autonomy and AI-enabled weapons systems could upset the military balance” with the US
The USA is also striving for more autonomy in computer chips. President Joe Biden signed legislation this summer called the CHIPS and Science Act to boost the US semiconductor industry. Intel plans to spend $20 billion on a massive new chip manufacturing center in Ohio.
This month, ahead of the Biden-Xi meeting on the sidelines of the G20 summit in Indonesia, Secretary of Commerce Gina Raimondo addressed the importance of advanced semiconductor technology, citing national security concerns.
“China is crystal clear,” she said. “They will use this technology for surveillance. They will use this technology for cyber attacks. They will use this technology to damage us and our allies or our ability to protect ourselves in a variety of ways.”
With the US and China locked in a cold war over computer chips, Taiwan’s importance has come to the fore.
Foreign Minister Antony Blinken recently warned that after Xi recently secured a third term, China may seek to extend its timeline to conquer Taiwan, saying Beijing has “made a fundamental decision that the status quo is no longer acceptable.” .
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