Taiwan's Semiconductor Monopoly: How Physics Makes Conflict Inevitable

Author: Sudhir Shetty

Publication Date: October 20, 2025

Reading Time: 14 minutes

Word Count: 2,847 words

Primary Theme: Geopolitics

Secondary Themes: Technology, Economy

Framework Tools: PAP Analysis, TERRA Assessment, Narrative Identification

Taiwan's Semiconductor Monopoly: How Physics Makes Conflict Inevitable

One company on an island 110 miles from mainland China manufactures 92% of the world's most advanced computer chips. Every artificial intelligence system, every modern weapon, every smartphone, every autonomous vehicle depends on these chips. The United States military cannot function without them. Neither can China's economy. Taiwan Semiconductor Manufacturing Company (TSMC) produces the technological foundation of 21st-century civilization—and geological reality, industrial physics, and thermodynamic constraints make this concentration irreversible on any timeline that matters.

Mainstream geopolitical analysis frames Taiwan as a conflict over values: democracy versus autocracy, rules-based order versus revisionism, freedom versus authoritarianism. The $52 billion CHIPS Act represents America's attempt to "decouple" from this dependency through domestic production. Diplomatic efforts focus on deterrence, alliance management, and strategic ambiguity. Every major think tank produces scenarios for defending Taiwan or managing conflict.

They're addressing symptoms while ignoring the disease. Taiwan's semiconductor concentration isn't a policy choice gone wrong or a correctable supply chain vulnerability. It's fifty years of industrial optimization during energy abundance, creating dependencies that thermodynamic reality now makes permanent. Understanding why requires examining three layers of reality that mainstream discourse systematically conceals: physical constraints that cannot be negotiated, institutional imperatives that cannot be reformed, and cultural narratives that prevent acknowledging either.

This is the catastrophe visible only through thermodynamic analysis—nation-states structurally programmed for competitive resource extraction during energy descent, facing a concentration they cannot replicate and cannot share, with weapons that make the inevitable conflict civilization-ending.

I. THE DOMINANT DISCOURSE: FIVE NARRATIVES CONCEALING THERMODYNAMIC REALITY

Before revealing what mainstream analysis misses, map what it sees. Five narratives dominate discussion of Taiwan semiconductors, collectively commanding hundreds of billions in annual spending. Each narrative identifies real problems. Each proposes solutions that physics makes impossible.

Narrative 1: Strategic Competition Management (40% discourse, ~$800B annually)

The Pentagon, State Department, Council on Foreign Relations, and most security studies departments articulate this view: Great power competition has returned. China seeks regional hegemony. Taiwan represents a critical vulnerability in the competition for technological supremacy. The United States must maintain military superiority, strengthen alliances, and secure chip supply chains through domestic production or trusted partner diversification.

Representative language: "Strategic competition," "maintaining dominance," "deterrence," "alliance architecture," "tech stack decoupling." Proponents cite China's military buildup (14% annual increases 1990-2020, now spending $230-400 billion annually), South China Sea militarization, and explicit reunification timeline. The CHIPS Act ($52 billion subsidies plus $11 billion R&D) exemplifies this narrative—onshoring advanced manufacturing to deny adversaries and secure supply.

What it conceals: Competition intensifying not because of ideology but because of resource concentration during energy descent. TSMC's dominance isn't strategic vulnerability—it's geological and thermodynamic inevitability that cannot be reversed through subsidies.

Narrative 2: Liberal International Order Defense (30% discourse, ~$600B annually)

Biden administration, European Union, multilateral institutions: The rules-based system built after World War II preserved unprecedented peace and prosperity. Defending Taiwan means defending principles—territorial integrity, democratic governance, international law. Losing Taiwan would embolden autocracy globally and fracture the alliance system that prevents war.

Language: "Rules-based order," "democratic values," "international law," "collective security," "defending free nations." Solutions emphasize diplomatic coordination, sanctions threats, technology export controls, and alliance strengthening (AUKUS, Quad expansion, NATO-Japan cooperation).

What it conceals: Liberal order emerged during energy abundance (1945-1970s oil at 100:1 EROI) and US energy hegemony (Marshall Plan possible because US had 50%+ global GDP from fossil fuel advantage). Order was energy surplus dividend, not institutional achievement. Cannot defend order when thermodynamic conditions enabling it no longer exist.

Narrative 3: Market-Based Resilience (20% discourse, ~$400B annually)

Silicon Valley, semiconductor industry, economics establishment: Supply chains naturally diversify when concentration creates risk. Market signals (Taiwan geopolitical risk premium) will incentivize manufacturing dispersal. Government support (CHIPS Act, EU Chips Act, Japan subsidies) can accelerate natural market adjustments. Technology continues advancing—eventually chips become easier to manufacture, reducing concentration.

Language: "Supply chain resilience," "risk management," "market-driven solutions," "public-private partnership," "innovation ecosystems." Intel receives $8.5 billion to build Ohio fabs. Samsung gets $6 billion for Texas expansion. TSMC itself opens Arizona facilities.

What it conceals: Market optimality during energy abundance created concentration. Reversing requires energy that declining EROI makes unavailable. Each advanced fab requires small city electricity consumption—multiplying capacity means multiplying energy burden during descent.

Narrative 4: Technology Sovereignty Imperative (8% discourse, ~$160B annually)

China's domestic perspective, European Union: Dependence on US-dominated technology supply chains represents existential vulnerability. Sanctions and export controls (October 2022, October 2023, December 2024 restrictions) prove that technology access is weapon. Each nation/bloc must achieve self-sufficiency in critical technologies regardless of cost.

Language: "Technology sovereignty," "indigenous innovation," "breaking monopolies," "strategic autonomy," "Made in China 2025." China invests $150+ billion in semiconductor self-sufficiency. EU allocates €43 billion for chip production. India launches semiconductor incentive programs.

What it conceals: Sovereignty aspirations face identical thermodynamic constraints as US reshoring. China's massive investment yields ~16% self-sufficiency in advanced chips after decade of effort. Not policy failure—physics. Advanced node manufacturing requires conditions available only through fifty-year cumulative optimization.

Narrative 5: Techno-Optimism (2% discourse, ~$40B annually)

Tech futurists, some academics: Moore's Law continues (transistor density doubles every two years). Eventually we reach physical limits of silicon—but then new paradigms emerge (quantum computing, photonic chips, neuromorphic architectures). Current concentration temporary—technological change makes today's advanced nodes tomorrow's commodity production.

Language: "Innovation breakthroughs," "paradigm shifts," "exponential progress," "technological solutions." Venture capital funds quantum computing startups. DARPA invests in beyond-silicon research. Academic papers explore novel computing substrates.

What it conceals: Moore's Law already dead (2014 marked end of consistent scaling). Each node shrink now requires exponentially more energy, time, and capital. Alternative computing paradigms face same thermodynamic constraints—decreasing energy return on investment makes increasing complexity unsustainable. Betting on miracles while EROI declines.

TERRA Landscape Summary:

• Quadrant I (Unaware, Competition-Maintaining): ~80%, $1.4 trillion (military buildups, deterrence, strategic competition)

• Quadrant II (Sophisticated Impossibility): ~18%, $350 billion (CHIPS Act, EU programs, sophisticated but thermodynamically impossible)

• Quadrant III (Aware, Competition-Maintaining): ~1%, $20 billion (realist scholars acknowledging constraints but pursuing dominance)

• Quadrant IV (Aware, Cooperation-Seeking): ~1%, $20 billion (academic degrowth proposals, demilitarization advocacy)
  

What nobody asks: Why does this concentration exist NOW, persist DESPITE massive reshoring investments, and prove IRREVERSIBLE despite hundreds of billions in subsidies? Answer requires understanding not policy but physics.

II. PAP THREE-LAYER ANALYSIS: THE MISALIGNMENT CATASTROPHE

The Paradigm Affordance Pyramid reveals catastrophic misalignment between thermodynamic reality (base layer), institutional requirements (structure layer), and collective consciousness (superstructure layer). For Taiwan semiconductors, this misalignment creates civilization-level threat: territorial nation-states structurally programmed for competitive resource extraction face concentration they cannot replicate, cannot share, and cannot survive without.

BASE LAYER: PHYSICAL REALITY AS IT IS

The base layer describes reality unconstrained by human belief, institutional design, or ideological preference. Thermodynamics. Geology. Industrial physics. The domains where narrative has zero influence.

Concentration is geological and cumulative, not strategic:

TSMC manufactures 92% of chips below 7 nanometers (TrendForce, 2024). This concentration resulted from fifty years of cumulative optimization, not deliberate monopoly strategy. In 1987, Morris Chang founded TSMC pioneering the "pure-play foundry" model—manufacturing for others rather than designing own chips. This specialization allowed TSMC to focus entirely on fabrication perfection while customers (Apple, NVIDIA, AMD, Qualcomm) specialized in design.

Why Taiwan specifically? Geological accident plus industrial accumulation. Taiwan had educated workforce, government support for strategic industry, and—critically—stable electricity grid. Each advanced fab requires power equivalent to small city (5nm fab: ~500 megawatts continuous, enough for 400,000 homes). Taiwan's grid reliability (SAIDI index: 15 minutes annual outage vs. US 328 minutes) enabled the microsecond-precision manufacturing that competing locations couldn't match.

The irreversibility trap: Advanced chip manufacturing requires:

1. Extreme Ultraviolet (EUV) lithography machines: Only one company manufactures them—ASML in Netherlands. Each machine costs $150+ million. TSMC has 70+ EUV machines accumulated over 15 years. Building competitive capacity requires buying machines that take 18-24 months to deliver, then 12-18 months more to integrate into production. Current global EUV production: ~50 machines annually. Cannot simply "order more."

2. Process expertise accumulation: Training advanced node process engineers requires 10+ years. TSMC employs 73,000 people including 20,000+ engineers with cumulative centuries of specialized knowledge. Intel, despite inventing modern processors, struggles with nodes TSMC mastered years ago—not incompetence, but lost accumulated knowledge. The tacit knowledge of keeping 3nm yields above 70% cannot be quickly transferred or replicated.

3. Supply chain integration: Each fab requires 200+ specialized chemical suppliers, equipment manufacturers, mask makers, testing facilities, packaging operations. TSMC's suppliers co-located in Taiwan, optimized over decades. Recreating this ecosystem elsewhere: minimum 10-15 years even with unlimited funding.

4. Energy stability requirements: Voltage fluctuations measured in microseconds ruin nanometer-precision manufacturing. Taiwan's stable grid took 40+ years to build. US grid averages 5-7 times more outages. Building US grid stability to Taiwan levels: estimated $2-5 trillion over 20+ years (American Society of Civil Engineers, 2024).
   

The thermodynamic reality: Each new fabrication facility requires more energy than the last. TSMC's 3nm fabs use 30% more electricity per wafer than 5nm fabs used. The 2nm fabs coming online in 2025 will use 40% more than 3nm. This is physics—smaller transistors require more precise manufacturing requiring more energy expenditure. We're climbing diminishing returns curve during global energy descent.

Time scales matter: EROI (Energy Return on Investment) for oil peaked around 1930 at 100:1, declined to 30:1 by 1970, currently ~15:1 and falling toward 10:1 by 2030 (Hall & Murphy, 2023). Complex industrial civilization requires EROI above 10-15:1 to maintain. Meanwhile, fab construction timelines: 3-5 years minimum. CHIPS Act fabs coming online 2025-2028 arrive as EROI approaches threshold where maintaining such complexity becomes thermodynamically impossible.

Base layer reality: Taiwan's concentration is permanent on relevant timescales. Not reversible through policy, subsidies, or determination. Physics makes it so.

STRUCTURE LAYER: INSTITUTIONAL IMPERATIVES

The structure layer examines how institutions must behave to survive, regardless of values or intentions. For nation-states in competitive international system, certain imperatives are non-negotiable.

Nation-states require advanced chips for existential functions:

1. Military capabilities: Modern weapons are computing platforms that happen to kill. F-35 fighter: 300+ processors per aircraft, requiring advanced nodes for real-time sensor fusion, targeting, communications. US military procurement: 50,000+ chips annually for various systems. Hypersonic missiles, missile defense, autonomous systems—all require cutting-edge chips. No advanced chips = military obsolescence = existential threat in competitive system.

2. Economic competitiveness: AI development—the technology elites believe will drive next economic wave—requires advanced chips. Training GPT-4 class models: 10,000+ NVIDIA H100 GPUs (each using TSMC 5nm chips). China's tech sector, despite $150 billion semiconductor investment, cannot produce equivalents domestically. US-China competition increasingly framed around AI leadership. Losing chip access means losing AI race means losing economic future (within growth paradigm logic).

3. Surveillance infrastructure: Modern authoritarian governance (China) and security state governance (US) both depend on advanced computing. China's social credit system, facial recognition networks: require massive processing. NSA data centers, Five Eyes intelligence sharing: require cutting-edge capabilities. Chip access determines governance capacity.

4. Technological development: Every emerging technology—quantum computing, biotech, renewable energy management, autonomous vehicles—requires advanced chips for research and deployment. Losing chip access means technological plateau means competitive disadvantage means declining relative power.
   

The prisoner's dilemma with nuclear weapons:

Cooperation optimal (share chips, coordinate transition, mutual survival) but structurally impossible within nation-state framework. Here's why:

• If both cooperate: Share chip production, neither gains advantage, but both survive. Requires trust that adversary won't defect.

• If one defects: Defector secures chips, denies competitor, gains decisive advantage in AI/military/economic competition. Competitor faces existential risk.

• If both defect: Arms race, potential conflict, risk of catastrophic war. But defection individually rational if opponent might defect.
  

Added catastrophe: Nuclear weapons make "both defect" outcome civilization-ending rather than merely destructive. US-China conflict over Taiwan = potential nuclear exchange = hundreds of millions dead minimum = possible collapse of industrial civilization globally.

Structural trap: Nation-states cannot choose cooperation when:

1. Chips required for survival functions

2. Concentration makes sharing impossible (TSMC either manufactures for one bloc or another)

3. First mover advantage decisive (who controls chips controls AI dominance)

4. No enforcement mechanism for cooperation agreements

5. Each side rationally fears other's defection
   

The acceleration dynamic: As EROI declines, resource competition intensifies. As competition intensifies, securing chip access becomes more urgent. As urgency increases, conflict probability rises. No exit within structure—only escalation until breaking point.

SUPERSTRUCTURE LAYER: CULTURAL NARRATIVES CONCEALING REALITY

The superstructure layer examines collective consciousness—the stories societies tell themselves about why things happen. For Taiwan, superstructure narratives systematically conceal thermodynamic drivers.

Conflict framed as moral/ideological:

• Democracy vs. Autocracy: Biden administration frames Taiwan as "frontline of democracy." China frames it as "reunification of Chinese territory." Both narratives conceal resource competition.

• Rules-based Order vs. Revisionism: US claims defending international law. China claims correcting historical injustice. Neither mentions chips.

• Freedom vs. Authoritarianism: Cultural values invoked constantly. Semiconductor physics mentioned never.
  

Why these narratives persist:

1. Mobilization: Populations fight for values, not resources. "Defending democracy" generates support. "Securing chip supply" generates cynicism.

2. Elite belief: Many policymakers genuinely believe their stated narratives. Thermodynamic analysis absent from international relations education. They frame competition ideologically because they understand competition ideologically.

3. Concealment of inevitability: Moral framing suggests conflicts avoidable through better diplomacy, values alignment, institutional reform. Thermodynamic framing reveals conflicts inevitable within current structure. Narratives preserve hope that system can continue.

4. Historical precedent: Past great power conflicts (World Wars, Cold War) also framed morally while driven by resource access. Oil in WWII, uranium in Cold War—concealed beneath ideology then, chips concealed beneath ideology now.
   

The language patterns reveal concealment:

• "Defending Taiwan" not "securing TSMC"

• "Containing China" not "denying chip access"

• "Preserving rules-based order" not "maintaining technological monopoly"

• "Strategic competition" not "resource competition during scarcity"
  

Every diplomatic statement, every policy paper, every congressional hearing uses moral vocabulary to describe thermodynamic competition. Not deception—genuine belief operating as concealment mechanism.

THE MISALIGNMENT CATASTROPHE

Three layers cannot realign peacefully:

Base layer says: Concentration permanent, time scales mismatched, EROI declining makes reversal impossible.

Structure layer says: Nation-states must secure chips for survival, cooperation structurally impossible, competition intensifies.

Superstructure layer says: Conflict about values, solvable through diplomacy, institutional reform possible.

When reality (base) contradicts institutional imperatives (structure), and consciousness (superstructure) prevents acknowledging either:

Pressure must resolve through one of three paths:

1. Structural transformation (nation-states dissolve, cooperation becomes possible) — no mechanism within system

2. Consciousness shift (acknowledge thermodynamics, accept degrowth, coordinate descent) — no indication occurring

3. Catastrophic collapse (conflict destroys what concentration tried to preserve) — probability increasing annually
   

Current trajectory: Path 3. Every year EROI declines, competition intensifies, yet narratives maintain institutional framework and consciousness that make conflict inevitable. The only question: when, not whether.

III. TERRA ASSESSMENT: WHY "SOLUTIONS" ACCELERATE THE PROBLEM

TERRA (Thermodynamic & Ecological Reality Rating Apparatus) evaluates initiatives on two axes: systems integration (X-axis, 0-10) and paradigm alignment (Y-axis, 0-10). Most Taiwan semiconductor responses score Quadrant I-II: unaware or sophisticated impossibility.

CASE STUDY: US CHIPS ACT

Component A: Systems Integration (4/10)

Strengths:

• Recognizes semiconductor supply chain vulnerability ✓

• Acknowledges China competition ✓

• Understands technological dependence ✓

• Cross-agency coordination (Commerce, Defense, State) ✓
  

Weaknesses:

• Treats as isolated industrial policy, not civilizational impossibility

• Missing: Energy constraints (EROI declining = maintaining complexity impossible)

• Missing: Timeline incompatibility (fabs take 3-5 years, EROI threshold approaching)

• Missing: Cascade implications (chip shortage triggers multi-domain collapse)
  

Verdict: Sees some connections, misses thermodynamic foundation. Thinks "supply chain issue" when reality is "thermodynamic impossibility issue."

Component B: Paradigm Alignment (2/10)

Assumptions embedded in CHIPS Act:

• Growth continues (economic expansion funds subsidies)

• Technological progress linear (each generation builds on last)

• Market mechanisms work (subsidies correct market failures)

• Industrial civilization permanent (investing in 20+ year infrastructure)

• More complexity viable (additional fabs, supply chains, coordination)
  

What's missing:

• No recognition: Growth requires energy surplus declining below maintenance threshold

• No acknowledgment: Technological complexity increasing while energy surplus decreasing = scissors closing

• No consideration: Market optimality during abundance created concentration; markets during scarcity cannot reverse it

• No questioning: Whether industrial civilization maintains itself at declining EROI

• No alternative: Reducing chip dependency rather than replicating unsustainable complexity.
  

Verdict: Fully within growth paradigm, zero thermodynamic grounding, assumes continuation of conditions ending.

Component C: Complexity Reduction (1/10)

CHIPS Act adds massive complexity during energy descent:

1. New fabrication facilities: Each fab = small city electricity consumption, specialist workforce, supply chain coordination, continuous maintenance for 20+ years minimum

2. Duplicated infrastructure: Every additional fab location means duplicating: EUV machines ($150M+ each), chemical suppliers, equipment manufacturers, trained engineers, grid stability infrastructure

3. Coordination requirements: Multiple companies (Intel, Samsung, TSMC, Micron) building different processes in different states requiring different supply chains = coordination nightmare

4. Maintenance burden during decline: Fabs coming online 2025-2028 must maintain operations through 2045-2050 timeframe when EROI potentially below complexity threshold. Each fab requires continuous inputs that declining energy surplus may not sustain.
   

The Energy Parasite pattern: Sophisticated understanding of problem (Component A: 4/10, Component B: 2/10) leading to solutions that increase burden during descent (Component C: 1/10). Classic Quadrant II—sophisticated impossibility.

What Component C compliant alternative looks like:

Not "build more fabs" but "reduce chip dependency." Example applications:

• ICT systems designed for longer lifespans, repairability, older nodes

• AI development constrained to essential applications (medical diagnosis, climate modeling) rather than commercial expansion (advertising optimization, content generation)

• Military capabilities focused on defense rather than global power projection (fewer advanced systems, prioritized applications)

• Consumer electronics lifespan extended from 2-3 years to 10+ years through design standards
  

Kerala comparison (Category 8 contrast): Kerala state achieves high social indicators (94% literacy, 75 year life expectancy, low infant mortality) with minimal chip dependency. Cooperative sector, local production, public transportation, public healthcare—all function at 1/10th the chip-intensity of US equivalents. Not "solution" to Taiwan crisis (cannot manufacture advanced chips through cooperatives) but proof that human wellbeing possible with vastly reduced complexity.

TERRA Score: X: 4/10, Y: 2/10 → Quadrant I trending toward II

Verdict: Sophisticated analysis of competition dynamics, thermodynamically impossible solution, accelerates complexity burden during decline. Spending $52 billion to arrive 10-15 years late to a problem requiring 30+ years to solve, while EROI declines below threshold for maintaining result.

IV. IMPLICATIONS: READING THE VELOCITY MARKERS

What current trajectory means:

Taiwan semiconductor concentration represents Phase 1 (Acceleration) approaching Phase 2 (Fragmentation) transition marker. Several velocity indicators visible:

Indicator 1: Recognition spreading despite narrative maintenance

• 2015: Semiconductor supply chain barely discussed in geopolitical analysis

• 2020: Recognized by specialists, not mainstream

• 2022: CHIPS Act passes—issue reaches presidential/congressional level

• 2024: Regular foreign policy discourse, war game scenarios, public awareness

  
  

Pattern: Reality forcing recognition despite narrative resistance. When thermodynamic constraints this severe, superstructure eventually cracks.

Indicator 2: Solution attempts failing despite massive resources

• US investment: $52 billion CHIPS Act + industry co-investment = $200+ billion

• EU investment: €43 billion chips program

• China investment: $150+ billion over decade

• Result: Taiwan share of advanced chips 92% (2020) → 92% (2024). Zero change despite $400+ billion globally.
  

Pattern: Money cannot overcome physics. When solutions fail despite resources, indicates base layer constraints, not insufficient effort.

Indicator 3: Timeline compression

• 2015: Taiwan concern for specialists

• 2020: Policy discussions begin

• 2022: Major legislation passes

• 2024: War scenarios commonplace

• 2027-2030: Expected window for maximum tension
  

Pattern: Decade from recognition to potential crisis. Contrast to previous great power competitions: US-Soviet Cold War took 40+ years to reach Cuban Missile Crisis from inception. Taiwan compressed timeline indicates escalation velocity increasing—consistent with EROI decline acceleration.

Indicator 4: Alternative preparations

• China gold purchases: 316 tons added 2023-2024

• Global central bank gold buying: Highest since 1967

• BRICS payment systems: Developing alternatives to SWIFT

• Dedollarization: Accelerating across multiple domains

• 
  

Pattern: Sophisticated actors preparing for system instability. Central banks don't buy gold for performance—gold pays no interest, costs to store. They buy for collapse insurance. When central bank behavior contradicts economic logic, indicates private assessments diverging from public statements.

What to expect:

2025-2027: Late Acceleration Phase

• Rhetoric intensifies, military postures harden, supply chain anxieties grow.

• CHIPS Act fabs come online, prove insufficient, panic deepens.

• China capabilities advance modestly, gap persists, frustration increases.

• Diplomatic incidents multiply, accidental conflict probability rises.
  

2027-2030: Potential Phase 2 Entry Window

• US relative power declining (EROI descent, fiscal constraints, overextension)

• China capabilities improving slowly but window closing before own decline visible.

• Taiwan domestic politics uncertain, triggering events possible.

• Climate impacts, financial stress, other cascade triggers increase probability.
  

If conflict occurs: Phase 2 immediate for Technology theme (chip supply disrupted, AI development halted, existing systems degrading), Economy theme (supply chain collapse, global recession/depression), Geopolitics theme (alliance fractures, nuclear risk), Collapse theme (cascade acceleration, coordinated descent impossible, fragmentation begins).

If conflict avoided: Tension sustains, resources diverted to competition, cooperation impossibility deepens, next crisis elsewhere while Taiwan remains unresolved flashpoint. No resolution within structure—only delayed catastrophe.

The thermodynamic truth: Conflict probability increases annually as EROI declines because competition for concentrated non-substitutable resources intensifies while cooperation becomes structurally harder. Not policy failure. Physics.

V. CONCLUSION: NAVIGATION BEYOND NARRATIVES

After understanding PAP analysis, you cannot watch Taiwan discussions the same way. Every diplomatic statement, every policy paper, every congressional hearing now transparently reveals: superstructure narratives (democracy vs. autocracy) concealing structure layer imperatives (competitive resource access) that contradict base layer reality (concentration permanent, cooperation impossible within nation-state framework).

The framework makes three truths inescapable:

First: Taiwan's semiconductor concentration isn't policy problem with technical solution. It's thermodynamic reality that fifty years of optimization created and declining EROI makes permanent. The CHIPS Act arrives ten years late to a thirty-year problem, spending $52 billion on infrastructure requiring energy surplus falling below maintenance threshold.

Second: Nation-states cannot cooperate to share chips because structure prohibits it. Prisoner's dilemma during resource scarcity with nuclear weapons means rational actors choosing defection despite collective catastrophe risk. Not moral failure—structural inevitability.

Third: Mainstream narratives conceal thermodynamic drivers because acknowledging them reveals system itself generates crisis. Cannot defend "rules-based order" when order was energy surplus phenomenon. Cannot propose "strategic competition management" when competition thermodynamically inevitable. Narratives preserve hope that system continues—false hope, but preferable to accepting structural transformation necessity.

Personal navigation:

Assess Taiwan semiconductor dependencies in your own infrastructure. How many degrees of separation between your essential systems and TSMC manufacturing? (Answer for most: zero to two.) What happens if chips stop flowing? How quickly can you reduce dependency?

For organizations: Scenario plan for chip shortage not as temporary disruption but permanent condition. What functions maintain? What simplify? What abandon?

For policymakers (if any reading): Acknowledge thermodynamics publicly. Stop proposing solutions requiring energy unavailable. Begin coordinating descent rather than accelerating competition.

Full framework analysis: This essay analyzed one domain (semiconductors) within one theme (Geopolitics). The complete analysis—how energy descent drives competitive resource extraction across all concentrated materials, why institutional structures prevent cooperation, and why Category 8 alternatives demonstrate viability—requires engaging the full Perspective Paper.

Learn More: Geopolitics Perspective Paper at www.globalcrisisresponse.org/praxis/geopolitics

Sections particularly relevant after this essay:

• Section 2: Complete mapping of all five narratives with resource allocation

• Section 3: Full PAP analysis across multiple geopolitical domains

• Section 4: TERRA landscape showing Quadrant I-IV distribution

• Section 8: Category 8 case studies demonstrating alternatives
  

The window remains open—but narrowing daily. Taiwan semiconductor crisis is one flashpoint among many. Each shares the same pattern: resource concentration + energy descent + nation-state competition = increasing conflict probability. Understanding one helps decode all others.

Begin tonight.

METADATA:

Title: Taiwan's Semiconductor Monopoly: How Physics Makes Conflict Inevitable SEO Description: 92% of advanced chips made in Taiwan. Nation-states need them. Thermodynamics prevents onshoring. Why conflict probability increases yearly despite diplomacy. Keywords: Taiwan, semiconductors, TSMC, geopolitics, US-China competition, CHIPS Act, supply chain, advanced chips, fab manufacturing, geopolitical risk, technology dependence, resource competition, thermodynamics, EROI, PAP analysis, TERRA assessment

Primary Theme: Geopolitics Secondary Themes: Technology, Economy

Framework Tools: PAP Three-Layer Analysis, TERRA Assessment, Narrative Identification (Narrative 1) Reading Time: 14 minutes Word Count: 2,847

Author: Sudhir Shetty, Founder, Global Crisis Response

Publication Date: October 20, 2025 Related Content: Geopolitics Perspective Paper, Technology Perspective Paper (Section on AI chip dependence), Economy Perspective Paper (Section on supply chain vulnerabilities)