US Treasury Secretary Scott Bessent on Tuesday warned that the global economy is dangerously exposed to a single point of failure: Taiwan’s near-total dominance in advanced semiconductor manufacturing.
He cautioned that any interruption to production on the island would have devastating worldwide repercussions.
“I would say that the single biggest threat to the world economy, the single biggest point of single failure, is that 97% of the high-end chips are made in Taiwan,” Bessent said during remarks at the World Economic Forum in Davos, Switzerland.
He warned that scenarios such as a blockade or the destruction of Taiwan’s chipmaking infrastructure would amount to an “economic apocalypse,” underscoring the urgency behind US efforts to shift critical semiconductor manufacturing back to the United States.
As part of a broader strategy to reduce reliance on China, Bessent said Washington is moving to establish a critical minerals alliance that would include the G7 nations along with Australia, India, Mexico and South Korea.
According to Bessent, the group is racing to develop independent mining, processing and refining supply chains in order to prevent Beijing from holding leverage over global industries, describing the risk as China wielding “the sword over our heads.”
He pointed to the revival of rare earth magnet manufacturing in his home state of South Carolina after a 25-year hiatus, noting that producers there expect to satisfy the bulk of US demand within the next two years.
Currently, Taiwan hosts top semiconductor companies including global leader TSMC or Taiwan Semiconductor Manufacturing Company, fabless designer Media Tek, testing and packaging titan ASE Group, and foundry UMC (United Microelectronics Corporation). Other players include Novatek, Realtek and packaging firms SPIL.
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