TSMC Faces Uncertainty As Taiwan's Energy Security Reportedly Comes Under Chinese Threat

The recent military exercises reportedly conducted by China near Taiwan have raised concerns about the island’s energy security and the chip industry, prompting Taipei and Washington to take immediate action.

Taiwan Rethinks Energy Strategy Amid Chinese Blockade Threats

Taiwan is heavily reliant on imported fuel, particularly liquefied natural gas (LNG), for its energy needs. Recent Chinese military drills have demonstrated how easily Taiwan could be isolated and crippled by cutting off its energy supply, reported The Wall Street Journal.

This has prompted Taiwan and the U.S. to take immediate action. Taiwan, which imports 97% of its energy by sea, is now looking to bolster its energy storage and reconsider its energy mix. The island is also considering a return to nuclear power, despite having shut down its last reactor just months ago.

The U.S. is also stepping in, with two senators introducing legislation to support Taiwan’s access to American LNG, including providing insurance for shipments in the event of a blockade, according to the report.

Energy Strains Could Impact Taiwan’s Chip Industry

The threat to Taiwan’s energy security comes at a time when the island is already facing geopolitical challenges. In September, President Donald Trump reportedly halted a major military aid package for Taiwan, valued at over $400 million, in an effort to secure a trade deal with China.

Meanwhile, Taiwan’s semiconductor industry, a key player in the global tech supply chain, has been making significant strides. Taiwan recently rejected a U.S. proposal for a 50-50 split in semiconductor production, asserting its independence in this critical sector. 

Taiwan’s tech industry continues to thrive, with Taiwan Semiconductor Manufacturing Co. (NYSE:TSM) experiencing a record market rally, driven by the AI boom and a landmark agreement between OpenAI and Advanced Micro Devices (NASDAQ:AMD).

However, potential disruption of Taiwan’s energy supply could have far-reaching implications for the island’s economy and its crucial semiconductor industry, with TSMC in focus.

Benzinga's Edge Rankings place TSMC in the 95th percentile for quality and the 33rd percentile for value, reflecting its mixed performance. Check the detailed report here. 

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.