Every iPhone in your pocket, every AI server powering ChatGPT, every F-35 fighter jet in the U.S. arsenal…

They all depend on chips made in a handful of factories clustered around one city in Taiwan.

If those factories went dark tomorrow, the global economy would grind to a halt.

Those factories belong to Taiwan Semiconductor Manufacturing Company, and they sit roughly 90 miles from the Chinese mainland.

At 3 a.m. in Hsinchu, the night shift is etching circuits smaller than viruses onto silicon wafers, creating the most advanced semiconductors on Earth.

The workers have no idea they're manufacturing at ground zero of the biggest geopolitical time bomb in decades.

Here's what makes this terrifying: China has been promising to "reunify" Taiwan for 75 years.

They now have the military power to do it. And when they do, they'll control the technological equivalent of the world's oil supply.

I believe this moment is coming sooner than anyone thinks. And Donald Trump may decide it's not worth fighting.

To fully understand what’s at stake, a little backstory is in order.

The Factory That Powers the Modern World

Taiwan Semiconductor Manufacturing Company, or TSMC, was established in 1987 by an experienced Taiwanese semiconductor executive.

Over the past few decades, TSMC has become the dominant force in making semiconductor chips on the face of the planet.

They operate what’s called a pure-play foundry business model, which means they make the chips that other semiconductor companies then package and sell to end customers.

This focus on chipmaking (the foundry business) has enabled them to build this dominant position.

The chips TSMC manufactures make up almost 70% of the semiconductor revenue in the world.

Looking at it on a dollar value captures their market share at the high end, as they physically make about 30% of the units in the industry.

Source: @EricFlaningam

Essentially, they make 90% or more of the high-value chips in the world.

These are the chips that power AI, the internet, our electrical grid, and even our military. If we were to lose access to TSMC’s chips, everything would grind to a halt in a matter of months.

The modern world as we know it would pause as countries struggle to rebuild the chipmaking capabilities that took TSMC four decades to develop.

America’s reliance on chips from TSMC is the single biggest vulnerability we have had in the last two centuries.

There has never been a more important company in the history of the world. And the key to this story is Taiwan.

China’s Bid for Technological Dominance

China, as we know it today, is a result of a civil war that concluded after World War II in 1949. The country is run by the Chinese Communist Party, or CCP.

That civil war was between the CCP and the existing government, the Republic of China.

After losing the civil war, the forces of the Republic of China retreated to the island of Formosa, or as it was known in Chinese, Taiwan.

In the almost 80 years since, there has been one constant: mainland China (controlled by the CCP) has said that they do not recognize the government of Taiwan and that it is part of China.

They have also said they will take it back at some point. And I am inclined to take them at their word.

How hard would it be for China to take Taiwan with military force? Realistically, not hard at all.

The Chinese have taken the benefits we have given them from global trade and spent more than $4 trillion on their military capabilities in the last two decades.

Essentially, cheap toys at Walmart bought by American consumers have financed Chinese tanks, missiles, and fighter jets.

The result is an overwhelming military advantage over the much smaller Taiwan. Here is a good table from Statista showing this graphically.

Source: Statista

I suspect that actual numbers are likely much more in China’s favor.

Add in the fact that Taiwan is only 90 miles from mainland China, and there is objectively no scenario where China cannot take Taiwan when it pleases.

Not necessarily in years, months, or even weeks. It might only take a matter of days.

How would the rest of the world react?

Well, China has also spent the last two decades sending out $100 billion or more in foreign aid and the same amount in foreign investment.

They have wisely focused on building up the number of countries that will back them in global bodies like the United Nations.

Helping Nigeria, Tanzania, Angola, and the Democratic Republic of Congo might not seem to be in the direct national interest of the U.S, but they have votes in these diplomatic entities.

Add in these countries’ wealth in resources, and the Chinese decided it was worth the money.

When (not if) China moves to take Taiwan, there will be little pushback from most of the world.

The few countries that object have no recourse and most will likely shrug their shoulders in exchange for Chinese money.

The obvious exception to all of this is the most powerful country in the world, the United States. But Trump is unlikely to stand in China’s way.

Why the U.S. Won’t Stop It

The U.S. has historically backed the Taiwanese. While we have never formally recognized Taiwan as a sovereign country, we have supported it with aid and military support.

Despite the views of critics, the U.S. still maintains a considerable military advantage vis-à-vis the Chinese. Perhaps not in numbers, but certainly in capabilities.

Even with that advantage, however, there is not much we could do to stop China.

Why would the U.S. even be interested in trying to stop China? The answer is TSMC.

When China takes Taiwan, it will control the single most valuable technological and economic asset in existence.

To put this in perspective, the U.S. has been working to restrict Chinese access to the most powerful AI chips. Chips like Nvidia’s Blackwell GB200 Superchip.

Do you know who makes that chip?

Yup, that’s right. The TSMC foundry, approximately 90 miles from mainland China. Here is a map to show you.

If we continue to restrict access to Nvidia chips, why doesn’t China just go and take the whole factory?

It is one of their main political goals anyway.

Not only does it solve their problem of access to the best technologies, but it also gives them the biggest piece of technological leverage in the last 100 years.

It’s the economic equivalent of an atomic bomb. And for now, they would be the only country that has one.

The Deal of the Century

Now, this is no fault of the Trump administration. They didn’t create this mess.

It is the result of inept and ignorant U.S. politicians who have ignored the world around them — and more than a few of whom have benefited from Chinese largesse.

This is, however, the Trump administration’s problem to handle.

It is also a problem that I believe evolves not in decades, but in the next few years. Maybe even the next few months.

The good news is that the Trump administration is the most realistic administration we have had in decades in recognizing the cost-benefit of geopolitical intervention.

Eventually, I predict that Trump will hand Taiwan over to the Chinese, likely as part of some greater trade and security deal.

The Chinese are smart. They understand they have been taking advantage of Western ineptitude for decades.

They also understand that eventually someone like Trump would wake up and react.

China is also vulnerable with an economy built on an unhealthy combination of uneconomic investment, global trade imbalances, and debt. They know there needs to be a reset.

That reset would involve the CCP losing face in a big way, even threatening their almost 80 years of complete control.

What better way to get out of this situation than to take over the most valuable asset in the history of technology and then use it to negotiate the best deal possible?

This is exactly what I predict is going to happen.

When China takes control of TSMC, it will be the biggest technological power shift in modern history.

And while Washington debates, the market impact could be sudden and severe. That’s why you need to prepare now. 

In my next issue of Truth & Trends, I will walk you through what this means for your stocks.