TL;DR: Consider removing international --semiconductor manufacturers from your portfolio entirely, or some long-term puts (much riskier), prior to this fall. Specifically, TSMC, SMCI, STM. Maybe move to MU, GFS and, uh... unironically INTC.
Happy weekend fellow regards. Maybe this isn't the best DD ever, but I had time today because I wasn't looking at chart lines moving all day long. Anything I discuss here is available through open-source reporting. The views are share here are mine alone, and do not represent the views of any organization or government entity I'm associated with. I'll go over what my concerns with the companies are, some angles you might not think about outside the foreign policy/defense world, and some "warning signs" to look out for.
Semiconductors have absolutely ridiculous potential in weapons & defense systems. Whether it's machine learning, advanced targeting systems, crypto and especially drones, it's performance is greatly enhanced by these semiconductors. Problem is, a LOT of the manufacturing for these semiconductors [are a little far away](https://worldpopulationreview.com/country-rankings/semiconductor-manufacturing-by-country). We have a lot of factories producing a relatively small amount, but you know who's currently constructing a lot of factories? [CHYNA.](https://en.wikipedia.org/wiki/List_of_semiconductor_fabrication_plants#cite_note-tsmc-phx-248) When it comes to advanced semi manufacturing, it's only one place really pumping out these bad boys, about 68% of them to be exact: A small country you may have heard of called Taiwan. The crux of the issue comes here; I just called Taiwan a small country. But there's another big player who thinks Taiwan is not really a country.
**What the fuck is a five year plan?**
Thanks for asking. A long time ago, a bunch of Soviets got together and decided it would be a good idea to create a big beautiful ~~bill~~ plan that they would use to remind themselves what the fuck they were supposed to be doing during a 5-year timeframe. China continues this communist tradition. Back in 2016, China announced their thirteenth five-year plan, which included "[Made in China 2025](https://en.wikipedia.org/wiki/Made_in_China_2025)". This was kept and added to in their fourteenth five-year plan. And they've kept up with it, with more to go. **Do not fool yourself. All these Chinese companies will, or do, report to the CCP.** Not just SMCI either; STM has also [prioritized China](https://www.digitimes.com/news/a20250110PD218/globalfoundries-fab-europe-st-joe-biden.html) for their investing.
In an attempt to counter this and stay ahead of the game, Joe Biden was urgently awoken from a nap to sign the CHIPS act, with the idea of investing heavily in US-based semi plants. However, it takes time to get things up and running and the US started pretty late, and things are moving fast. So we're still pretty dependent on TSMC.
**What's Taiwan got to be afraid for anyways?**
[Back in 2019](https://web.archive.org/web/20210704104654/https://www.nytimes.com/2019/01/05/world/asia/taiwan-xi-jinping-tsai-ing-wen.html), President Xi offered to "unify" (read: take Taiwan) the "easy" way, which was obviously denied by then-president of Taiwan, Tsai Ing-wen. Nowadays, [China simply threatens the death penalty](https://www.rfa.org/english/news/china/taiwan-independence-06212024151620.html) to those who support Taiwanese independence. However, since March 2005, the Chinese congress has permitted a standing "[we'll use the military to invade if we need to](https://www.tandfonline.com/doi/abs/10.1080/02185370508434260)" law. If you haven't looked at a map in a long time, I'll provide you one now.
[The narrowest part of the strait between the two countries is only 81 miles.](https://preview.redd.it/sv3po8u1aove1.jpg?width=1280&format=pjpg&auto=webp&s=f5d3c0a3a8fa4314e738da214f03abacc9e84ddc)
A few years ago, the prediction in the defense community was China [would invade around 2027](https://www.defensenews.com/pentagon/2024/05/07/how-dc-became-obsessed-with-a-potential-2027-chinese-invasion-of-taiwan/). However, this was PRIOR to the 2024 US elections. Since then, our foreign policy has gotten VERY shaky and may embolden the CCP to start making moves. Some pressures include:
* Increased focus on isolationist policies by the US, leading to a much more negative opinion of us worldwide. This includes us reducing trade (by means of tariff) with other countries, or getting rid of USAID, which supported large populations of developing countries that will now turn to China for investment.
* Tariffs imposing greatly increased economic pressures on China. Say what you want about "wELL tHey OnLy exPorT XX% of ItEmS!!" or something like that. It doesn't really matter, tariffs are, in fact, a danger to their economy, and they are not going to sit around while we both bleed economically.
* Other current military conflicts the US is involved in is providing China information about our capabilities. When Houthis [shoot down our drones,](https://www.jpost.com/international/article-850637) or when [Chinese soldiers battle in Ukraine](https://www.cnn.com/2025/04/16/europe/ukraine-russia-chinese-nationals-intl-latam/index.html), or when WE shoot down Houthi missiles, China is learning and training to gain an edge on a fight in a way they didn't previously have an opportunity to. In fact, they're [practicing right now.](https://www.reuters.com/world/asia-pacific/chinese-military-says-it-is-conducting-exercises-around-taiwan-2025-03-31/)
You can bet your ass that if China invades Taiwan, TSMC factories are first on the list of targets. And if they do, you can bet your ass twice that THEIR factories will be high on OUR list. However, domestic (especially in the eastern US, but likely everywhere) semi production will be a LOT safer.
**Sure dude whatever. But what if they just don't invade at all?**
Well, the thing is, they don't actually need to invade. In fact, it's even more likely they'll fight it out in what we call "the ~~gay~~ grey zone". This is a bunch of people, or dudes on computers, doing things they can pretend they didn't do. For example, remember when Israel [used a computer virus to shut down part of Iran's nuclear program?](https://www.trtworld.com/magazine/here-s-how-israel-hacked-iran-s-nuclear-facility-45838) Think stuff like that. [Here's a little paper about what they've been up to.](https://globaltaiwan.org/wp-content/uploads/2025/03/OR_CCP-Gray-Zone-Tactics-Against-TW.pdf) It talks about a lot of "defense supply chain" hacks, [spy balloon parties](https://p.dw.com/p/4q9Ol), and whatever they can do to disrupt or take down both public and private systems.
**So what will make you think "Oh it's about to happen!"?**
Personally, I think no matter what, it would most likely occur around the fall or winter of this year. Communists like to be flashy national holidays or anniversaries, like October 1st (When the PRC was founded) or December 7th (The "Great Retreat", when the nationalist government retreated to Taiwan). Also, the late summer is a stormy season there, and it would probably be really hard to invade an island in a monsoon. Otherwise, I'll be on the lookout for some things I would consider "key events"
* Outcome of the South Korean Election and Troops: I haven't looked too closely, but if a Pro-China or Anti-US candidate wins, the CCP might feel the ability to act a little more freely. But if the US decides to [actually reduce troops in South Korea,](https://www.stripes.com/theaters/us/2025-04-10/troops-korea-withdrawal-senate-trump-17431591.html) they will definitely feel like they could act.
* US [cancels the CHIPS Act](https://www.reuters.com/technology/trump-wants-kill-527-billion-semiconductor-chips-subsidy-law-2025-03-05/) or pulls out of the [AUKUS Program](https://breakingdefense.com/2025/04/australian-thinktank-warns-of-less-reliable-america-high-pricetag-for-aukus-sub-program/).
* Pete Hegseth leaks more signal messages, this time involving China or TSMC Puts.
* I start seeing TikToks or posts like "American colonization is bad for Taiwan!" or super pro-unification stuff popping up. Don't forget, [the Cyberspace Administration of China gets to sit a board member on ByteDance](https://markets.businessinsider.com/news/stocks/tiktok-ban-bytedance-golden-shares-chinese-government-communist-party-board-2023-3). They will certainly use the app to influence public opinion.
That's my little rant. And I don't actually know anything, I'm just a regard with a computer. But these governments will continue PUMPING money into these companies, and my money is always on the US. I'd stick with US Semi manufacturers for a little while, like GlobalFoundries, Micron, and maybe we'll make Nana proud with Intel.