By the Geopolitical Desk
The Shift from Maritime to Molecular Geography
For centuries, the concept of a “choke point” was exclusively maritime. It referred to the physical constriction of geography—the Strait of Malacca, the Suez Canal, the Strait of Hormuz, and the Bab el-Mandeb. These were the jugular veins of the global economy. Approximately 30% of the world’s seaborne-traded crude oil passes through the Strait of Hormuz daily; roughly 12% of global trade passes through the Suez. The strategic calculus was simple: whoever had the naval tonnage to close these gates could asphyxiate a rival’s economy.
However, in the Fracture-Critical era, the geography of coercion has shifted from the maritime to the molecular. While physical straits remain relevant, the most lethal choke points today are located deep within the invisible geography of high-technology supply chains. These are “asymmetric bottlenecks”—points in the production process where a single nation, or even a single company, holds a monopoly so absolute that it creates a lever of geopolitical influence more potent than a carrier strike group.
The global economy has transitioned from being oil-constrained to being compute-constrained. In this new architecture, the ability to blockade the flow of logic (semiconductors) is the modern equivalent of a naval blockade.
The Silicon Shield: Taiwan’s Hyper-Concentration
The center of gravity for this new geography is a small island in the Western Pacific: Taiwan. The concentration of semiconductor manufacturing capacity in Taiwan is a statistical anomaly that defies all traditional risk management logic.
Taiwan Semiconductor Manufacturing Company (TSMC) is not merely a company; it is the single most critical node in the global industrial ecosystem. As of 2023, Taiwan produced over 60% of the world’s semiconductors and, more critically, over 90% of the most advanced chips (those smaller than 10 nanometers). These are the chips required for advanced smartphones, hyperscale data centres, autonomous weapons systems, and the training of Large Language Models (LLMs).
To put this vulnerability in perspective:
- The United States, which invented the semiconductor, now accounts for only roughly 12% of global manufacturing capacity, down from 37% in 1990.
- Europe accounts for roughly 9%.
- China, despite massive state investment, hovers around 15-18%, mostly in legacy nodes (older generation chips).
If the Strait of Hormuz were closed, the world would face an energy crisis and a global recession. If the semiconductor fabs in Hsinchu and Tainan were disabled—whether by kinetic war, blockade, or sabotage—the global economy would simply stop. Estimates suggest a disruption of Taiwan’s output would cost the global economy approximately $2 trillion to $2.5 trillion annually. It would not just be a recession; it would be a technological depression.
This “Silicon Shield” acts as Taiwan’s primary deterrence. The logic holds that the disruption would be so catastrophic to the Chinese economy (which imports over $350 billion worth of chips annually—more than it spends on oil) that Beijing cannot afford to invade. However, this mutual assured economic destruction creates a paradox: the more indispensable Taiwan becomes, the more it becomes the singular focus of strategic anxiety in both Washington and Beijing.
The Equipment Bottleneck: The Dutch Monopoly
While Taiwan holds the manufacturing choke point, the choke point for the machines that make the chips is even narrower. This bottleneck is controlled by the United States and its allies, specifically the Netherlands and Japan.
The production of advanced chips requires Extreme Ultraviolet (EUV) lithography machines. These are the most complex machines ever built by humans. They use lasers to vaporise droplets of molten tin 50,000 times a second to create plasma that emits light, which is then focused by the world’s flattest mirrors to print circuits on silicon atoms.
There is only one company in the world that can make these machines: ASML in the Netherlands.
- Market Share for EUV: 100%.
- Unit Cost: Approx. $200 million to $350 million per machine.
- Supply Chain Complexity: One machine contains over 100,000 parts sourced from 5,000 suppliers.
This monopoly allows the West to execute a “remote kill switch” on the technological advancement of rival powers. By pressuring the Dutch government to restrict ASML’s exports, the United States has effectively frozen China’s ability to indigenously produce cutting-edge chips. Without EUV lithography, physics imposes a hard ceiling on how advanced Chinese chips can get. No amount of capital investment can bypass the lack of this specific tool in the short to medium term.
Japan plays a similar, though less publicised, role through companies like Tokyo Electron and Nikon, which dominate other steps in the lithography and photoresist sectors. The US-Japan-Netherlands trilateral agreement on semiconductor export controls is the most significant geopolitical alliance of the 2020s, acting as a technological firewall that no individual nation can breach.
The “Small Yard, High Fence” Doctrine
The weaponisation of these choke points was formalised under the Biden administration’s doctrine of “Small Yard, High Fence.” This strategy marks the end of the laissez-faire approach to technology transfer.
- The “Small Yard”: This refers to a specific subset of technologies deemed critical for national security—specifically, advanced logic chips, quantum computing, and AI-enabling hardware.
- The “High Fence”: This refers to the draconian export controls, entity listings, and investment bans placed around these technologies.
The October 7, 2022, export controls implemented by the U.S. Commerce Department were a watershed moment. They did not just ban the sale of chips; they banned “U.S. persons” (citizens and green card holders) from supporting the development of advanced chips in Chinese facilities. Overnight, hundreds of American executives and engineers working in Chinese semiconductor firms were forced to resign or risk losing their U.S. citizenship status. This was a decapitation strike against human capital.
The impact was immediate. In the first year following the controls, China’s imports of semiconductor manufacturing equipment from leading nations dropped significantly, forcing a scramble for second-hand equipment and a doubling down on legacy chip production (28nm and above).
The Efficiency Tax: The Cost of Resilience
The reaction to these weaponised choke points is a global race for “sovereignty” that completely abandons economic efficiency. We are witnessing the unwinding of the specialised global supply chain in favour of redundant, localised chains.
- The U.S. CHIPS and Science Act: Allocates $52.7 billion in subsidies to lure manufacturers back to American soil.
- The EU Chips Act: Mobilises €43 billion in public and private investment.
- South Korea’s K-Belt Strategy: Plans for $450 billion in investment over a decade.
This is the “Efficiency Tax.” Building a fab in Arizona costs approximately 4 to 5 times more than building one in Taiwan due to labour costs, regulatory hurdles, and a lack of existing supply ecosystems. TSMC’s founder, Morris Chang, famously called the U.S. effort to rebuild domestic manufacturing an “exercise in futility” due to these cost disparities.
Yet, nations are paying this tax willingly. The logic of the state (security) dictates that paying a 400% premium is acceptable if it guarantees access to chips during a geopolitical crisis. We are moving from a Just-In-Time world, where inventory is waste, to a Just-In-Case world, where inventory is security.
Conclusion: The Anaconda Strategy
The weaponisation of choke points is essentially a 21st-century update of the “Anaconda Plan”—the Civil War-era strategy to strangle the Confederacy by cutting off its trade. Today, the West is attempting to wrap an Anaconda around the Eurasian high-tech sector.
However, this strategy carries high risks. By weaponizing interdependence, the West encourages its rivals to innovate faster. Huawei’s recent release of a smartphone powered by a domestically produced 7nm chip (the Kirin 9000s), despite sanctions, suggests the blockade is porous.
Furthermore, China controls choke points of its own. It dominates the processing of critical minerals:
- Gallium: China controls 98% of global production.
- Germanium: China controls 68% of global production.
- Graphite: China controls 67% of the global supply.
In response to semiconductor controls, Beijing has already begun restricting exports of these minerals, which are essential for radar systems, LEDs, and EV batteries.
We have entered a cycle of reciprocal strangulation. The “invisible geography” of supply chains is now the primary battlefield, and in this war, there are no non-combatants—only nodes in a network that can be squeezed.
Leave a Reply