In a hypothetical scenario where China invades Taiwan, the global economy would suffer severe disruption. China and the Communist Party would gain control of Taiwan’s advanced semiconductor industry, including the sole manufacturer of leading-edge 2nm chips.
While some argue that chip-making equipment could be remotely disabled, the true value lies in Taiwan’s skilled workforce. If China were to acquire this human capital, it could quickly bolster its own advanced chip manufacturing capabilities. The key goal for the United States to take in these displaced workers before they are forcefully exploited by the Chinese.
A prime example of attracting valuable human capital to the United States is Operation Paperclip. This program recruited top German scientists, engineers, and technicians, including former Nazis, to relocate to the U.S. after World War II. The goal was to leverage their expertise to advance American technological and military capabilities.
One notable, albeit controversial, figure was Wernher von Braun, the designer of the V-2 rocket (the first ballistic missile). In the U.S., von Braun became the director of the Marshall Space Flight Center and played a crucial role in developing the Saturn V launch vehicle, instrumental in the Apollo moon missions.
Operation Paperclip brought over 1,600 German scientists and engineers to the U.S. It was a top-secret program, primarily because the U.S. aimed to prevent the Soviet Union from acquiring this valuable talent for themselves.
The U.S. has time to prepare for a potential “Operation Paperclip 2.0” scenario. China needs a reliable backup plan to counter U.S. chip sanctions, especially if they invade or impose an embargo on Taiwan.
As a CNBC report from September 27, 2024, highlights, China’s domestic chip industry is not yet self-sufficient. However, replicating Taiwan’s chip capabilities won’t be as simple as relocating a few thousand engineers. TSMC’s 2nm chip production requires a highly skilled workforce of over 10,000 individuals.
Relocating this talent pool would involve moving over 30,000 people, including families, to a region with existing fabrication facilities (the U.S., South Korea, Japan, or Europe). This presents a significant logistical challenge, particularly regarding housing. The U.S. faces housing shortages, while Japan’s available housing is primarily in rural areas, far from major manufacturing hubs.
Despite these complexities, a contingency plan should be developed now. This plan should include provisions for housing, which, in the worst-case scenario, would be absorbed into the existing U.S. housing market.
Beyond housing, location is crucial. The obvious choice is the TSMC facility in Phoenix, Arizona. However, the current project’s scope is too limited. The entire facility needs to be at least five times larger, and the U.S. government must discreetly plan for this eventual operation.
If Taiwan faces an invasion, the allied nations must prioritize a coordinated strategy that allows for a possible loss of Taiwan to the Communist. While this may seem unpalatable, the only way China would consider a task is if they believe they would win.
A Chinese invasion of Taiwan would be a massive undertaking, involving an estimated six million Chinese troops, including a landing force exceeding two million. Thousands of Chinese saboteurs would likely be deployed within Taiwan to disrupt defenses, aided by bribed sympathizers within the Taiwanese leadership.
Unlike the D-Day landings in World War II, which involved roughly 7,000 vessels, a Chinese invasion of Taiwan could require up to 70,000 smaller naval craft to overwhelm missile defenses, with half of these craft sunk before they reach the beaches and half that reach the beaches killed upon the beach, however if 500,000 people can make a beachhead, then Taiwan will be lost. Instead of relying on large warships, China would likely employ a swarm strategy, overwhelming Taiwan’s defenses with sheer numbers.
China would also need to launch over five million missiles and unmanned kamikaze drones to deter U.S. intervention. Traditional tactics, like using large ships for artillery bombardment, would be ineffective. The invasion would result in a “meat grinder” scenario, with potentially a 1.5 million Chinese casualties. However, China would likely commit overwhelming force, deploying wave after wave of troops until they achieve victory.
At this stage, Operation Paperclip 2.0 would need to be activated. Upon the first signs of invasion, planes would airlift Taiwanese families to the Philippines, where they could catch pre-arranged flights to Phoenix and other locations in the United States.
As a final act, the U.S. would destroy the fabs in Taiwan to prevent China from controlling this critical technology. Subsequently, allied nations would impose a 100% tariff on Chinese goods and components, effectively isolating China from the global economy. This would lead to a divided world, where China’s economic influence diminishes significantly, similar to the isolation experienced by the Soviet Union behind the Iron Curtain.
However, this approach would have devastating consequences for the global economy. The reality is that Europe, Japan, South Korea, and the rest of the world must eventually prepare for the possibility of an “Iron Curtain” falling upon China. In this case most countries will not be able to depend on China for trade.
