Taiwan Chip Reliance: America’s Hidden Threat

Robotic arm assembling electronic circuit boards in production.

The United States’ reliance on Taiwanese semiconductor manufacturing poses a significant threat to national security and economic stability.

Story Highlights

U.S. dependence on Taiwanese chips reaches a record high, posing economic and geopolitical risks.
Asian manufacturers outpace U.S. efforts, maintaining dominance in advanced chip technology.
U.S. policy responses, while significant, may not fully address the structural vulnerabilities.

U.S. Vulnerability in the Global Chip Race

In 2025, America’s dependency on Taiwanese semiconductor manufacturing has reached alarming levels, with 56% of U.S. chip imports coming from Taiwan as of June 2025. This dependency exposes the United States to significant economic and geopolitical risks, as Taiwan remains a pivotal player in the global semiconductor supply chain.

Despite recent U.S. investments in domestic chip production, Asian manufacturers continue to outpace American efforts, challenging long-term U.S. leadership in advanced chip technology.

Challenges Facing U.S. Semiconductor Policy

The U.S. government’s efforts to bolster domestic semiconductor manufacturing, including the CHIPS Act, have led to over $500 billion in private-sector investments since 2020. However, these measures have yet to close the gap with Asian competitors, who benefit from substantial government subsidies and strategic industrial policies.

As a result, the U.S. market share peaked at 35.2% in late 2024, only to slip to 30.6% as Asia regained momentum in 2025. The U.S. must confront these structural dependencies to maintain its technological edge.

Asian manufacturers like TSMC and Samsung continue to dominate advanced chip manufacturing, bolstered by aggressive capacity expansions and technological advancements.

The U.S. policy focus on domestic capacity building must also address the need for a resilient supply chain and international cooperation to mitigate long-term risks. While the U.S. has slowed Chinese progress through export controls, the broader competitive landscape remains challenging.

Long-term Implications for U.S. Leadership

The current trajectory poses both short-term and long-term challenges for the U.S. technology and defense sectors, which rely on secure semiconductor supplies. Without sustained investment and comprehensive policy support, the U.S. risks losing its leadership in advanced chip manufacturing and innovation.

American workers and communities stand to benefit from new manufacturing investments, but the potential for economic disruption remains if supply chains face geopolitical tensions or natural disasters.

Ultimately, the U.S. must align its policy and investment strategies with its strengths in research and development, finance, and entrepreneurship to effectively navigate the global semiconductor race. A holistic approach that emphasizes supply chain resilience and international cooperation will be crucial to preserving America’s technological leadership in the coming decades.