by Patrick Fearon-Hernandez, CFA | PDF

(Note: Due to the upcoming Memorial Day holiday, the next report will be published on June 7.)

In our recent WGR series titled “The Geopolitics of Taiwan” (see Parts I, II, and III), we examined Taiwan’s geopolitical position in relation to China and the United States.  We described how both China and the U.S. want the island in their camp, and we explored what each country might do to achieve that goal.  Any friction between great powers like China and the U.S. can be dangerous, but the struggle over Taiwan is especially fraught because of the island’s unique position in the global semiconductor supply chain.  In Part I of this report, we explain why Taiwan and the Taiwan Semiconductor Manufacturing Company (TSM, $111.85) represent a key vulnerability in the global computer chip industry.  Part II will discuss the economic and financial implications if Taiwan and the company are forced to deglobalize and join either a U.S. or Chinese economic bloc.

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As of the date of this report, certain Confluence Investment Management LLC strategies are invested in Taiwan Semiconductor Manufacturing Company (TSM). Opinions, estimates, and forward-looking statements included in the report are as of a certain date and subject to change without notice. This report is published for informational purposes and is not an offer or solicitation to buy or sell any security. Past company performance is no guarantee of future results.