Picture this: you're the toughest guy on the block. Best house, best car, best guns. But the key to your car, the generator for your house, and the ammo for your guns — all of it comes from the little shop across the street. And the bully on the other side has been eyeing that shop for decades.
Welcome to the most underestimated geopolitical nightmare on the planet.
The Island Holding the World by the Throat
Taiwan. An island smaller than Maryland. And that's where TSMC — Taiwan Semiconductor Manufacturing Company — is based, the company that manufactures somewhere between 80% and 90% of the world's most advanced chips.
The very same chips that make Nvidia worth more than most countries. That run ChatGPT. That train the AI models every American CEO swears will "revolutionize" their business.
The United States, in its breakneck race to dominate artificial intelligence, built an absolutely spectacular technological castle. They just forgot one small detail: the foundation sits on someone else's land, 80 miles from mainland China.
It's like Walter White building the greatest meth lab in New Mexico but depending on Tuco Salamanca to deliver the pseudoephedrine every week. What could possibly go wrong, right?
The CHIPS Act and the Illusion of Sovereignty
"Oh, but the U.S. passed the CHIPS Act! They're bringing factories home!"
No shit they did. In 2022, they threw $52 billion on the table to subsidize semiconductor manufacturing on American soil. TSMC is building fabs in Arizona. Intel got a mountain of cash to try and compete.
But here's the reality check your favorite LinkedIn analyst won't tell you:
Building an advanced chip fab takes 3 to 5 years. And when it's finally ready, the technology it produces is already one or two generations behind what TSMC is making in Taiwan. TSMC's Arizona fab, which was supposed to be operational in 2024, got delayed. Production of the most advanced chips (3 nanometers and below) still is — and for a long time will be — dependent on Taiwan.
It's like patching up the boat in the middle of a storm. Better than nothing? Sure. Enough? Not even close.
The Chinese Elephant in the Room
Xi Jinping makes no secret of the fact that he considers Taiwan part of China. The People's Liberation Army runs military drills around the island with increasing frequency. Every time an American politician visits Taipei, the Chinese respond with more jets crossing the Taiwan Strait.
Now connect the dots: if China decides to act — whether through invasion, a naval blockade, or simply enough economic pressure — the planet's advanced chip supply chain stops. It doesn't slow down. It stops.
And with it, the AI revolution stops. The data centers stop. The self-driving cars stop. The American military drones stop. The stock market that priced in trillions of dollars on the promise of omnipresent artificial intelligence stops.
Nassim Taleb would call this the most obvious black swan in history. Everyone sees it, everyone knows it, and nobody actually prices in the risk.
What This Means for Your Wallet
If you've got money in Nvidia, AMD, Apple, Broadcom, Qualcomm — basically any company that depends on advanced silicon — you have exposure to Taiwan. Whether you like it or not.
That doesn't mean you should sell everything and buy gold tomorrow. It means you need to know the risk you're taking instead of being hypnotized by the "AI will change the world" narrative.
It will. If the chips keep showing up.
Semiconductor stocks are priced for perfection. Any geopolitical stumble in the Taiwan Strait and the market will remember real fast that humanity's most sophisticated tech supply chain runs through a vulnerable island.
Buffett sold his entire position in TSMC in 2023 after holding it for just one quarter. When they asked him why, he was blunt: "I didn't like the location."
If the Oracle of Omaha got spooked, who are you to ignore it?
