Regional Share of Frontier AI Chip Manufacturing

The most discussed factor concerns the degree to which the complexity of the Taiwanese ecosystem will act as an anchor versus the degree to which national security imperatives will drive a relocation. Status-quo respondents argue that Taiwan’s “entrenched manufacturing expertise, operational culture, and concentrated talent pool” augurs against a rapid shift: “The advantage is not just capital expenditure, but accumulated operational know-how and ecosystem depth,” writes one, and another that “sunk investment in Taiwan is an extremely strong draw that will be difficult to overcome.” New-paradigm respondents, however, tend to view evolving national security imperatives as transformative: “From a US national security perspective, heavy dependence on Taiwan for the most advanced logic nodes is a single point of failure. Even if Taiwan remains the best producer, the U.S. has strong incentives to ensure some share of frontier-capable capacity exists on U.S. soil as insurance against blockade, conflict, coercion, or disruption.”

Status-quo respondents typically deem the probability of China invading, or establishing administrative control over Taiwan by other means (by the end of 2030 or 2040), to be low. One writes, “I give Taiwan a 90% chance of remaining independent by 2040, so I believe they will still be the leading manufacturer.” Another adds, “The likelihood of Taiwan being annexed by China or another power is non-zero, but I do not place significant probability on this event.” Several predicted that Taiwan would prioritize maintaining their “‘silicon shield’ to incentivize the US to keep Taiwan away from the control of the CCP [Chinese Communist Party].” New-paradigm respondents, however, place substantially higher weight on Taiwan losing its independence: “I’m fairly certain that China is going to invade Taiwan in the near future,” writes one, while another concludes “the most likely scenario by 2030 is that Taiwan will be under Chinese control.” A few cite specific probabilities: “I am currently predicting about a 33% chance of China gaining control of Taiwan by 2030. And a 67% chance by 2040.” Some see political shifts as facilitating an invasion: “The U.S. commander in chief has a world view shaped by only his own moral compass which apparently divides the planet into several parts on geographic boundaries. Under such logic Taiwan would naturally fall to China…”

Many status-quo respondents cite restrictions on the transfer of extreme ultraviolet lithography (EUV) technology as decisive: “ASML has effectively [a] monopoly on chip manufacturing equipment, and cannot sell to China due to EU export restrictions, meaning that Chinese-based manufacturing [of leading-edge logic chips] is essentially zero and will remain so in [the] short term.” Another writes, “I expect the collective West to keep the latest technology away from China. And I do not believe China can develop all of the technology pieces required to build a new process node [compared to] the combined ecosystem of U.S./Japan/Netherlands/Germany/Korea.” New-paradigm respondents predict China will nevertheless find a way. One writes, “Somewhere in the next 5-10 years, I expect China to have practical and scalable EUV capabilities, leading to Chinese-made chips catching up with Taiwan/USA,” while another cites precedent: “China will likely be successful in developing in-country manufacturing, despite export controls, given their success with EVs, solar cells, and batteries.” A third speculates that “if the EU-U.S. relationship keeps deteriorating it might be possible [for China] to buy…the EUV machines from ASML in the future (and if not, it's just a matter of also slowly but steadily hiring former ASML engineers).”

Many status-quo respondents express skepticism: “The U.S. may look to diversify and re-shore but so far has not shown the ability to do so well," writes one while another cites specific challenges: “USA-sourced advanced semiconductors will hit a ceiling due to structural issues related to U.S. labor quality (by far the largest factor, particularly at the floor/operations technician-level), U.S.-located supply chain…, U.S. environmental regulation…, [and] U.S. input costs.” New-paradigm respondents express more optimism, with several pointing to the possibility that stated targets will be met: “The U.S. is plausibly a large minority producer by 2030 because Commerce and GAO both describe CHIPS-backed projects as moving the U.S. from 0% in 2022 to about 20% of global leading-edge logic by 2030, and TSMC [Taiwan Semiconductor Manufacturing Company] Arizona is already producing advanced chips.” Another echoes that sentiment, pointing to the potential for “TSMC Arizona, Intel Ohio, and Samsung Texas [to ramp] up volume production of <3nm chips by 2028-2030.”

Status-quo respondents generally see other regions as having only a marginal impact: “Other regions realistically only include S Korea and it probably will enter this market,” writes one, while another predicts that “the other regions will not even be able to enter the competition. The EU, for example, lacks the facilities and the restrictive…legislation does not help…” New-paradigm respondents often echo this pessimism, but some treat other regions as a real, if second-tier, growth margin. One expects “South Korea…a new player, to gain a bit of market share in the long term.”