IHT: A 'Silicon Shield' Protects Taiwan From China



A 'Silicon Shield' Protects Taiwan From China
Paris, Friday, September 29, 2000 By Craig Addison International Herald Tribune HONG KONG - Regardless of whether the United States decides to build an East Asian missile shield, Taiwan can take comfort from a ''silicon'' shield that is already in place. It will provide some protection for the island if China seeks a military solution to the so-called Taiwan problem. The silicon shield grows stronger each year. Silicon-based products, such as computers and networking systems, form the basis of the digital economies in the United States, Japan and other developed nations. In the past decade, Taiwan has become the third-largest information technology hardware producer after the United States and Japan. Military aggression by China against Taiwan would cut off a large portion of the world's supply of these products. Suddenly the global information technology economy - dependent on silicon and software - would be threatened with disruption. Such a development would wipe trillions of dollars off the market value of technology companies listed in the United States, Japan and Europe. Chinese attempts to damage the factories or supply lines of Taiwan companies like Acer, Quanta Computer and Taiwan Semiconductor Manufacturing would be an indirect but potentially lethal hit against giant U.S. firms, including IBM, Dell Computer, Hewlett-Packard and Cisco Systems, that rely on Taiwan for manufacturing services and components. China will have to think long and hard before taking any military action to disrupt or destroy Taiwan's economy. While officers in the Chinese armed forces may not realize that taking out a Taiwan semiconductor wafer fabrication plant would soon undermine the global computer supply chain, President Jiang Zemin of China must know that it will. Trained as an engineer, he served as minister of electronics during the early 1980s. His son, Jiang Mianheng, is a partner in a wafer fabrication project in Shanghai with Winston Wang of Taiwan's Grace T.H.W. Group. While China has been successful in restricting Taiwan's diplomatic moves to gain greater international prominence, it has been unable to stop the island's rise as a technology provider to the world. Taiwan is now a key source of hardware for the digital economy. This has helped provide the international recognition that it craves. It is also a deterrent against possible Chinese aggression. In 1996, when China test-fired missiles in the Taiwan Strait to intimidate voters ahead of the first free elections on the island, the United States sent two aircraft carrier battle groups to the area. The message was clear: Not only would America not tolerate an outright military attack on Taiwan, it would not allow any action that might disrupt the island's exports. While the United States has never said that it would go to war to protect Taiwan - an intentionally vague policy - the fact that so much of the American information technology economy is dependent on a safe and productive Taiwan would make such action highly probable. Any U.S. moves to protect its supply of information technology products from Chinese aggression would have some parallels to the Gulf War. While the U.S.-led United Nations forces were ostensibly stepping in to protect a democratic Kuwait from attack by Saddam Hussein's military dictatorship, the motives had more to do with protecting the supply of Kuwaiti oil to the rest of the world. In the case of Taiwan, it would be to protect the supply chains to U.S. and Japanese technology companies. Any American action to defend Taiwan would need support from Japan, which once ruled over Taiwan. Again, the increasing integration of Japan's information technology manufacturing economy with Taiwan's would play a major role. Japan's advanced chipmakers now subcontract large portions of their manufacturing to Taiwanese companies, as do its makers of notebook computers. Taiwan is also a major market for Japanese electronic parts that go into the wide range of information technology items produced by Taiwan. The writer, editor-in-chief of Electronic Business Asia magazine from 1994 to 1997, is the author of the forthcoming book ''Silicon Shield.'' He contributed this comment to the International Herald Tribune.

A 'Silicon Shield' Protects Taiwan From China

Paris, Friday, September 29, 2000

By Craig Addison International Herald Tribune

HONG KONG - Regardless of whether the United States decides to build an East Asian missile shield, Taiwan can take comfort from a ''silicon'' shield that is already in place. It will provide some protection for the island if China seeks a military solution to the so-called Taiwan problem.

The silicon shield grows stronger each year. Silicon-based products, such as computers and networking systems, form the basis of the digital economies in the United States, Japan and other developed nations. In the past decade, Taiwan has become the third-largest information technology hardware producer after the United States and Japan. Military aggression by China against Taiwan would cut off a large portion of the world's supply of these products. Suddenly the global information technology economy - dependent on silicon and software - would be threatened with disruption.

Such a development would wipe trillions of dollars off the market value of technology companies listed in the United States, Japan and Europe. Chinese attempts to damage the factories or supply lines of Taiwan companies like Acer, Quanta Computer and Taiwan Semiconductor Manufacturing would be an indirect but potentially lethal hit against giant U.S. firms, including IBM, Dell Computer, Hewlett-Packard and Cisco Systems, that rely on Taiwan for manufacturing services and components.

China will have to think long and hard before taking any military action to disrupt or destroy Taiwan's economy. While officers in the Chinese armed forces may not realize that taking out a Taiwan semiconductor wafer fabrication plant would soon undermine the global computer supply chain, President Jiang Zemin of China must know that it will. Trained as an engineer, he served as minister of electronics during the early 1980s. His son, Jiang Mianheng, is a partner in a wafer fabrication project in Shanghai with Winston Wang of Taiwan's Grace T.H.W. Group.

While China has been successful in restricting Taiwan's diplomatic moves to gain greater international prominence, it has been unable to stop the island's rise as a technology provider to the world. Taiwan is now a key source of hardware for the digital economy. This has helped provide the international recognition that it craves.

It is also a deterrent against possible Chinese aggression. In 1996, when China test-fired missiles in the Taiwan Strait to intimidate voters ahead of the first free elections on the island, the United States sent two aircraft carrier battle groups to the area. The message was clear: Not only would America not tolerate an outright military attack on Taiwan, it would not allow any action that might disrupt the island's exports.

While the United States has never said that it would go to war to protect Taiwan - an intentionally vague policy - the fact that so much of the American information technology economy is dependent on a safe and productive Taiwan would make such action highly probable.

Any U.S. moves to protect its supply of information technology products from Chinese aggression would have some parallels to the Gulf War. While the U.S.-led United Nations forces were ostensibly stepping in to protect a democratic Kuwait from attack by Saddam Hussein's military dictatorship, the motives had more to do with protecting the supply of Kuwaiti oil to the rest of the world. In the case of Taiwan, it would be to protect the supply chains to U.S. and Japanese technology companies.

Any American action to defend Taiwan would need support from Japan, which once ruled over Taiwan. Again, the increasing integration of Japan's information technology manufacturing economy with Taiwan's would play a major role. Japan's advanced chipmakers now subcontract large portions of their manufacturing to Taiwanese companies, as do its makers of notebook computers. Taiwan is also a major market for Japanese electronic parts that go into the wide range of information technology items produced by Taiwan.

The writer, editor-in-chief of Electronic Business Asia magazine from 1994 to 1997, is the author of the forthcoming book ''Silicon Shield.'' He contributed this comment to the International Herald Tribune.