The Cost of Abandoning Taiwan
[By Josh Richards and Joseph Hanacek]
Foreign policy debates are often framed around a single question: what causes are worth fighting for? Far less often do strategists ask the more uncomfortable but ultimately more revealing question, what causes are worth losing for? In the case of Taiwan, that distinction matters profoundly.
A war over Taiwan would carry the potential for catastrophic military losses, a severe global economic shock, and escalatory dynamics that could touch the nuclear threshold. Senior U.S. defense officials, allied governments, and independent analysts increasingly agree on one point: the only certainty in a direct U.S.–China conflict is that win or lose, the repercussions would be drastic and global in scope.
But focusing only on the dangers of war obscures the larger strategic reality. Taiwan is not simply another flashpoint in an increasingly crowded Indo-Pacific. It is a structural pillar of the modern international system, technological, economic, and military, on which U.S. power rests. Allowing Beijing to force Taiwan under its control would not merely alter the cross-Strait balance; it would reshape the global distribution of power in ways that are both durable and deeply unfavorable to the United States and its allies.
At the heart of the U.S. relationship with Taiwan are factors that will influence the rest of the twenty-first century: access to advanced computing hardware, the US diplomatic credibility and real power projection, and the strategic positioning that will drive the next generations of technological breakthroughs. Abandoning Taiwan would impose costs across all three simultaneously, and once incurred, those costs would be extraordinarily difficult, if not impossible, to reverse.
The strategic situation, in other words, is not that the United States might defend Taiwan and suffer severe consequences. It is that choosing not to defend Taiwan would impose even greater long-term costs on American power. The preferred outcome remains a peaceful resolution that maintains preservation of Taiwan’s democratic autonomy and the cross-Strait status quo. But a peaceful appeasement that effectively abandons Taiwan to coercive unification would be cataclysmic for America and the entirety of the western world.
Reframing the Question: The Strategic Costs of Appeasement
Reframed properly, the Taiwan question is less about the risks of action than the consequences of inaction. If the United States were to abandon Taiwan in the face of Chinese coercion or force, three losses stand out as both credible and, once triggered, largely irreversible.
The first is the erosion, and likely collapse, of U.S. leadership in advanced computing, including the race toward artificial general intelligence (AGI) and the broader ecosystem of high-performance and consumer computing hardware. Taiwan is not merely a major supplier within global semiconductor markets; it is the central node of the world’s most advanced fabrication capacity. Control over that capacity confers leverage not only over supply chains, but over the pace and direction of technological progress itself. Should Taiwan’s semiconductor ecosystem fall to the People’s Republic of China (PRC), China would gain an unparalleled advantage in the production of the hardware that underpins artificial intelligence, advanced weapons systems, and the digital economy writ large.
The second cost of appeasement would be a profound loss of U.S. diplomatic credibility around the world, particularly with regards to its power projection capability across Asia. Taiwan is the keystone of the first island chain and a focal point for how allies and partners assess American resolve. A failure to defend Taiwan would not be interpreted in isolation; it would be read as a signal about U.S. willingness to absorb risk on behalf of its security commitments more broadly. In more concrete terms, it would result in the creation of an incredibly influential strategic salient for China, providing them geostrategic leverage throughout the entire first island chain. Japan, South Korea, the Philippines, Singapore, and others would be forced to reconsider long-standing assumptions about American staying power, basing access, intelligence sharing, and strategic alignment. History suggests that when fear eclipses confidence in a patron’s resolve, alliances erode quickly, and are rarely reconstituted on the same terms.
The third cost is more subtle, but no less consequential: the loss of the United States’ ability to break out ahead in the next generation of foundational industries. Advanced computing is not an end in itself; it is the enabling substrate for future dominance in quantum technologies, automated manufacturing, robotics, advanced materials, and scalable energy systems. The United States currently enjoys a powerful advantage in these domains not only because of capital or policy, but because it remains the world’s most attractive ecosystem for top scientific and engineering talent. A collapse in technological leadership, paired with a visible retreat from global commitments, would redirect those talent flows, and the breakthroughs they enable toward alternative centers of gravity.
Taken together, these three losses describe more than a regional setback. They outline a pathway by which the United States would relinquish its position at the center of the global technological and security order. Once the process began, reversing it would demand resources, time, and political cohesion on a scale that great powers historically struggle to mobilize once strategic momentum turns against them.
The first cost of appeasement: Taiwan and the Foundations of American Technological Power
Taiwan’s strategic importance to the United States is often summarized in shorthand: semiconductors. But that simplification understates the depth of the relationship and obscures why Taiwan’s role is so difficult to replace. Taiwan is not merely a large producer within global chip markets; it is the central node of the world’s most advanced semiconductor manufacturing ecosystem. Its firms are the world’s only producers capable of manufacturing the world’s most advanced semiconductor nodes, combining leading-edge logic fabrication, advanced process integration, and the tacit manufacturing knowledge required. Despite massive state-backed investments by the United States, China, South Korea, Japan, and the European Union, no competitor has successfully replicated Taiwan’s frontier manufacturing capabilities at any scale.
Advanced semiconductors now underpin nearly every domain of modern state power, including artificial intelligence, advanced weapons systems, secure communications, space and cyber capabilities, and industrial productivity. The United States retains world-class strength in chip design, electronic design automation, and systems integration, but those advantages are inseparable from Taiwan’s ability to manufacture at the cutting edge. Without access to that manufacturing base, the U.S. technology stack becomes brittle, slower to innovate, and more vulnerable to disruption.
Much has been made of U.S. efforts to reshore or “friend-shore” semiconductor production through initiatives such as the CHIPS and Science Act. These efforts are strategically necessary, but they should not be confused with strategic sufficiency. Building a handful of fabrication plants does not recreate the dense industrial ecosystem Taiwan has spent decades refining, an ecosystem that includes specialized suppliers, an experienced workforce, rapid iteration cycles, and institutional memory that cannot be legislated into existence on a political timeline. Even optimistic projections suggest that U.S.-based fabs will take years to reach maturity, and longer still to approach the yield, flexibility, and cost structures that Taiwanese firms currently achieve.
From a strategic perspective, Taiwan’s value lies not only in output volume, but in the continuity and reliability of frontier computing supply. That supply underwrites what can be described as frontier computing, the high-performance chips used in advanced AI research, military systems, and scientific discovery, as well as consumer computing, the mass-market hardware that sustains global digital ecosystems.
In this sense, Taiwan functions as critical infrastructure for the modern world. Its fabs are not interchangeable assets that can be relocated or duplicated without consequence. They are strategic choke points whose fate will shape the balance of technological power between democratic and authoritarian systems for decades to come.
The Computing Arms Race: Bad Cases, Worst Cases, and Irreversible Outcomes
At a high level, two plausible futures stand out, both damaging, but one far more destabilizing than the other.
The first is what might be termed the bad case. In this scenario, a Taiwan crisis, through blockade, quarantine, or limited conflict, causes Taiwanese semiconductor production to halt or sharply contract. Advanced chip supply would collapse, driving up costs, freezing portions of AI research and deployment, and triggering a sharp economic downturn. Analysts estimate that a major Taiwan disruption could cost the global economy trillions of dollars in lost output within the first year alone.
In this bad case, both the United States and China would scramble to fill the void. The Western world retains access to much of the underlying intellectual property, design expertise, and niche manufacturing equipment required to rebuild capacity, but it moves slowly in constructing facilities, training labor forces, and scaling production. China, by contrast, possesses formidable advantages in industrial mobilization: the ability to build quickly, direct capital at scale, compel workforce participation, and absorb inefficiencies through state subsidy. At the same time, Beijing would continue to face constraints imposed by export controls, sanctions, and limited access to the most advanced lithography and design tools. The result would be a grinding, costly computing arms race in which neither side emerges unscathed.
The second scenario, the worst case, is qualitatively different. In this outcome, Taiwan’s semiconductor ecosystem does not merely shut down; it falls under effective PRC control, either through occupation, coerced integration, or a perceived abandonment by the United States that precipitates a rapid political and industrial merger. In such a case, the single most important variable is not physical plant damage, but the fate of Taiwan’s workforce, intellectual property, and specialized equipment. Should those assets be absorbed intact into China’s industrial base, Beijing would almost certainly surge ahead in both frontier and consumer computing.
This outcome would have consequences far beyond short-term supply shocks. China would become the dominant producer of advanced hardware across nearly every category of modern computing, from data center accelerators and AI training chips to smartphones, electric vehicles, avionics, and missile guidance systems. The competitive balance in artificial intelligence would tilt decisively, not because of superior algorithms alone, but because of privileged access to the hardware that makes large-scale experimentation and deployment possible. Whether one believes artificial general intelligence is imminent or distant, beneficial or dangerous, its development under the exclusive control of an authoritarian state and great power rival would represent one of the most destabilizing and consequential shifts in the global balance of power in modern history.
Even in the bad case, the world would begin to fracture into competing technological blocs as states seek reliable access to computing resources. In the worst case, that fracture would harden rapidly, locking in Chinese advantages and forcing others to adapt to standards, platforms, and dependencies set in Beijing rather than Washington. Once that transition occurred, reversing it would require not just policy change, but the reconstruction of entire industrial and research ecosystems, a task that history suggests few great powers successfully accomplish after a major strategic reversal.
From this perspective, the central danger of abandoning Taiwan is not disruption, but capture. Preventing the seamless transfer of Taiwan’s semiconductor ecosystem into PRC hands is therefore not a secondary concern or contingency plan; it is one of the core strategic imperatives shaping the U.S. response to China’s aggression.
Pax Silica Ends: Two Tech Stacks and a Fractured Global Economy
If Taiwan’s semiconductor ecosystem is disrupted, or worse, captured, the consequences will not be confined to chip shortages or temporary market dislocations. The more enduring effect would be the collapse of what might be called pax silica: a global technological order in which advanced computing supply chains, standards, and research networks remain broadly interoperable across political systems.
That order is already under strain. U.S. export controls, Chinese industrial policy, and intensifying strategic competition over technology flows have begun to fragment the global technology landscape. A decisive break over Taiwan would accelerate this process dramatically, pushing the world toward two competing and increasingly incompatible technology stacks, one centered on the United States and its allies, the other organized around the People’s Republic of China.
On the surface, this bifurcation might appear to concern consumer-facing choices: whose smartphones dominate emerging markets, which AI platforms are most widely adopted, or which digital standards govern next-generation networks. In reality, the fault lines would run much deeper. Competing tech stacks would structure access to rare earth minerals, advanced materials and chemicals, energy inputs, cloud infrastructure, financial services, and the research ecosystems that underpin long-term innovation. Countries would be pressured, implicitly or explicitly, to align their regulatory regimes, supply chains, and security partnerships with one bloc or the other.
In such a world, Taiwan’s fate becomes determinative. If Taiwan remains outside PRC control, the United States and its partners retain a credible foundation for a high-end technology ecosystem that can sustain innovation and resilience, even under stress. If Taiwan falls into Beijing’s orbit, the balance shifts decisively. China would not only command a dominant share of advanced hardware production; it would be positioned to shape standards, dictate terms of access, and leverage dependencies across a wide swath of the global economy.
This would be particularly destabilizing for middle powers and developing states, many of which rely simultaneously on Western security guarantees and Chinese economic engagement. Over time, such pressures would erode the openness that has characterized the post–Cold War global economy, replacing it with a more rigid, bipolar system defined by technological allegiance rather than market efficiency.
For the United States, the end of pax silica would represent more than a loss of convenience or profitability. It would mark a structural shift in how power is accumulated and exercised internationally. Technological leadership has long allowed Washington to amplify its influence without constant coercion, embedding U.S. preferences in standards, platforms, and institutions that others voluntarily adopt. A world split between rival tech stacks, especially one in which China controls the most critical hardware inputs, would sharply curtail that advantage.
Appeasement and the Erosion of US Influence Abroad
Technology alone, however, does not determine strategic outcomes. Taiwan’s importance is magnified by its role in the military and political geography of the Indo-Pacific, where perceptions of U.S. resolve are as consequential as force posture itself.
Taiwan sits at the center of the first island chain, anchoring a network of alliances and partnerships that constrain the People’s Liberation Army’s ability to project power into the Western Pacific. Its continued autonomy complicates Chinese military planning, preserves U.S. freedom of maneuver, and reassures regional partners that American commitments remain credible. Conversely, Taiwan’s loss would create a cascading crisis of confidence that no amount of declaratory policy could easily repair.
Diplomatic credibility is not an abstract concept. It is built through repeated demonstrations that commitments will be honored even when doing so entails risk. A failure to defend Taiwan would be interpreted throughout Asia not as a narrow exception, but as a signal that the United States is unwilling or unable to absorb the costs required to maintain its strategic position in the Indo-Pacific. Japan would be forced to reconsider the viability of extended deterrence and the security of its southwestern islands. South Korea would face renewed pressure to pursue independent nuclear capabilities. Southeast Asian states would accelerate hedging strategies, recalibrating basing access, intelligence cooperation, and diplomatic alignment in anticipation of a diminished U.S. role.
The logic underlying these reactions is well captured by Thucydides’ enduring insight that fear, honor, and interest drive state behavior. Alliances endure not because partners are altruistic, but because they believe their interests and honor are safer within a collective framework than outside it. When fear of abandonment outweighs confidence in a patron’s resolve, alignment gives way to accommodation. History offers few examples of alliances that survived such a reversal intact.
Importantly, this dynamic cuts both ways. A credible U.S. effort to defend Taiwan, even under adverse conditions, would reinforce deterrence well beyond the immediate theater. It would signal that when Washington draws a line in the sand, crossing it has repercussions. In a world where diplomacy is increasingly being made on the basis of realpolitik rather than ideological framework, demonstrating a willingness to partake in brinksmanship with PRC is the only way to assure allies and partners that it is in their own best interest to share burdens, accept risk, and align their long-term strategies with U.S. leadership regardless of the shifting political winds attendant with democratic nations. As several analysts have noted, credibility is often less about winning clean victories than about demonstrating a willingness to stand firm when outcomes are uncertain.
Taiwan thus functions as a strategic litmus test. The question facing U.S. policymakers is not whether defending Taiwan guarantees stability, but whether abandoning it would all but ensure the unraveling of the alliance system that has underwritten American influence in Asia for more than half a century.
Geography Still Matters: Taiwan as the Modern Unsinkable Aircraft Carrier
Long before semiconductors or artificial intelligence entered the strategic lexicon, Taiwan’s importance was rooted in geography. General Douglas MacArthur famously described the island as an “unsinkable aircraft carrier,” a forward position from which the United States could project power and constrain adversaries across maritime Asia. While the technologies of warfare have changed dramatically since MacArthur’s era, the underlying logic has not; if anything, it has intensified.
An autonomous and U.S. aligned Taiwan shapes deterrence dynamics throughout the region. As things stand today, any Chinese attempt to project power seaward must contend with layered defenses, allied coordination, and the prospect of early escalation under unfavorable conditions. Remove Taiwan from that equation, and the PLA’s operating environment becomes markedly more permissive. Deterrence weakens not because U.S. capabilities vanish overnight, but because the balance of risk and opportunity shifts decisively in Beijing’s favor.
A PRC controlled Taiwan presents a stark contrast from a geostrategic perspective. As Taiwan sits astride the most critical maritime and air corridors linking Northeast Asia to Southeast Asia and the broader Pacific, control of the island would allow the PLA to break through the first island chain, extending Chinese power projection deep into the Philippine Sea and undermining the defensive geometry that has long favored the United States and its allies. From Taiwan, China could more effectively contest U.S. naval operations, threaten key bases in Japan, and exert sustained pressure on sea lines of communication that carry a significant share of global trade.
Equally important are the second-order effects. A PRC-controlled Taiwan would significantly tighten Beijing’s grip over waters within the entire first island chain, from Japan to Singapore. In the event that China wanted to exert pressure on any nation attempting to conduct commerce inside that arc, a PRC bastion in Taiwan would alter risk calculations for commercial shipping, energy flows, and undersea infrastructure, driving up insurance costs and increasing the vulnerability of global trade to political pressure. For an international system heavily dependent on maritime commerce, such a shift would reverberate far beyond the Indo-Pacific.
Seen through this lens, MacArthur’s aphorism is not an anachronism. Taiwan remains an unsinkable aircraft carrier, not in the narrow sense of hosting runways, but as a fixed geographic asset that anchors regional stability. Surrendering that asset would impose enduring military disadvantages that no amount of distant force projection could easily offset.
Losing the Next Industrial Breakout
The strategic consequences of abandoning Taiwan would not end with today’s technologies or force postures. A third, often under-appreciated cost lies in the loss of opportunity to lead the next wave of industrial and scientific breakthroughs, those that will define economic and military power in the decades ahead.
Advanced computing is the enabling substrate for progress across a wide range of emerging sectors, including quantum information science, automated and additive manufacturing, robotics, advanced materials, and scalable low-cost energy systems. In each of these fields, the pace of discovery and commercialization is increasingly shaped by access to high-performance computing, large datasets, and AI-driven experimentation. States that command these inputs gain a compounding advantage, accelerating innovation while widening the gap with competitors.
The United States currently occupies a strong position in this landscape not because of deterministic superiority, but because it hosts a uniquely attractive ecosystem for global talent. Its universities, research institutions, venture capital networks, and open scientific culture continue to draw many of the world’s most capable engineers and scientists.
Abandoning Taiwan would place this ecosystem at risk. A visible collapse in U.S. technological leadership, paired with a retreat from global security commitments, would redirect talent flows and investment decisions toward alternative hubs perceived as ascendant or more stable. China, already investing heavily in strategic technologies through state-directed programs, would be well positioned to capitalize on such a shift, particularly if it also secured dominant access to advanced compute through control of Taiwan’s semiconductor industry. Losing ground in these areas would not simply slow U.S. growth; it would constrain strategic choice, forcing policymakers to operate within narrower margins of technological advantage.
History suggests that technological leadership, once ceded, is extraordinarily difficult to reclaim. It depends not only on investment and policy, but on intangible factors, prestige, confidence, and the belief among innovators that they are building the future rather than catching up to it. By allowing Taiwan to fall into Beijing’s hands, the United States would risk forfeiting precisely those intangibles at a moment when they matter most.
In this sense, the defense of Taiwan is not merely about preserving the status quo. It is about protecting the conditions under which the United States can continue to shape the frontier of American strategic advantage. Appeasement would not buy stability; it would mortgage the future.
Conclusion: Fear, Honor, and Interest in the Twenty-First Century
More than two millennia ago, Thucydides observed that fear, honor, and interest drive the decisions of states. That framework remains instructive today, not as a relic of classical realism, but as a reminder that power, credibility, and perception are inseparable in international politics.
In the case of Taiwan, all three align. The fear is evident: a world in which China controls the most critical nodes of advanced computing, dominates the military geography of the Western Pacific, and sets the terms of technological and economic participation for others. The interest is unmistakable: preserving the foundations of American technological leadership, alliance credibility, and freedom of maneuver in a system that has underwritten U.S. prosperity and security for decades. And honor, often misunderstood, lies not in abstract notions of pride, but in the trust that allies and partners place in American commitments, and in the reputational capital that makes leadership possible.
Much has been written about whether Taiwan is a cause worth fighting for. That question, while important, is incomplete. The more consequential question is whether the United States is prepared to live with the world that would follow from choosing not to. The evidence suggests that such a world would be poorer, more coercive, and less stable, defined by fractured technology systems, weakened alliances, and a strategic environment in which force and dependency replace rules and consent.
This paper has argued that Taiwan’s significance lies not in symbolism, but in structure. Taiwan anchors the technological supply chains, alliance networks, and military geography that sustain the current international order. Its loss would not be a discrete regional setback, but a systemic shock whose effects would reverberate across innovation, security, and global governance for generations.
For that reason, this paper serves as a foundation rather than a conclusion. The defense of Taiwan cannot be understood, or executed, through military posture alone. It depends on a wider set of enabling conditions: the ability to sustain asymmetric defense at scale, to endure economic and energy coercion, to secure critical materials, and to preserve the physical and digital infrastructure that connects Taiwan to its allies. Each of these domains merits focused analysis in its own right.
Defending Taiwan does not promise easy victories or risk-free outcomes. But abandoning it would represent a strategic self-inflicted wound, one that would shape the next century of American power far more decisively than the costs of deterrence ever could. In that sense, Taiwan is not merely a test of resolve. It is the fulcrum on which the future balance of the international system may well turn.
Josh Richards is the Chief Commercial Officer of Pacific Peering. He serves on the UN’s Joint Task Force on SMART Cables as a member of the Steering Committee, and chairs the Business Development Committee. He is a Security Fellow with the Truman National Security Project, a Tech Policy Fellow with the Aspen Institute, and a Senior Fellow with AI2030.
Joseph Hanacek is a Surface Warfare Officer in the United States Navy. He serves as a Warfare Tactics Instructor at the Surface Advanced Warfighting School detachment of the Naval Surface and Mine Warfighting Development Center in San Diego, CA. The views and opinions presented herein are those of the author and do not necessarily represent the views of the Department of War, the Department of the Navy, or its components.
This article appears courtesy of CIMSEC and may be found in its original form here, including extensive footnotes.
The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.
