What Falls if Taiwan Falls? The Reality of the "Domino Effect" - Semiconductors and Deterrence: The Impact of a Taiwan Contingency on the Global Economy

"If Taiwan Falls, the 'Domino' Will Cascade" — The Significance of the Loudest Alarm Sounded in Washington

On September 13 (local time, September 12), Chiu Chui-cheng, the Minister of the Mainland Affairs Council (MAC) of Taiwan, responsible for cross-strait policy, delivered a speech at the Heritage Foundation, a conservative think tank in Washington. He warned, "China is preparing for war to seize Taiwan. If Taiwan falls by force, the regional balance will collapse, leading to a 'domino effect' that threatens the safety and prosperity of the United States." The speech was reported in detail by Reuters, which also mentioned the centrality of Taiwan's semiconductor industry.Reuters

This statement coincided with reports that China's latest aircraft carrier, the "Fujian," had passed through the Taiwan Strait for the first time, heightening tensions. The Chinese Navy explained it as a "normal navigation for scientific research and training," but the fact that a large vessel, not yet in service, traversed a sensitive area adds new material to the debate on military balance in the region.AP News

Meanwhile, the Chinese Embassy reiterated its usual stance, stating it "pursues peaceful reunification with the utmost sincerity" while also saying it will "take all necessary measures to safeguard national sovereignty and territorial integrity." It was also reported that the Chinese military monitored and warned U.S. and British ships passing through the strait around the same time.InfoMoney

What Will Topple the 'Domino'?

The core of Chiu's message consists of three points.

1. China Strengthens Military Posture with 'No Renunciation of Force' as Premise
   The analysis suggests that military expansion continues under the political goal of "reunification," against the backdrop of increased air and naval activities in the surrounding areas.Reuters

2. If Taiwan Falls, the U.S.-Led Asia-Pacific Order Will Collapse in a Chain Reaction
   The assessment is that the loss of a key point in the so-called First Island Chain would negatively impact the deterrence of allies and partners.Reuters

3. Global High-Tech Supply Chains, Including Semiconductors, Will Be Directly Hit
   Taiwan is a crucial hub for advanced semiconductors, and if it is destabilized, the impact on the global economy, particularly the U.S. tech industry, would be significant.InfoMoney
   
   

The Reality Reflected by the 'Fujian' Passage

The passage of the "Fujian" through the strait is explained by China as "not a demonstration due to pre-service status" and seen by military sources as "part of performance verification." However, the timing of the navigation is crucial. The passage during a period when a key Taiwanese figure is delivering messages in the U.S. can be read as a "maritime information war" where signals of deterrence and counter-deterrence intersect. Along with the regular passage of U.S. and British ships (the U.S. Navy asserts the right of navigation in international waters), the strait becomes a stage visualizing the conflict of legal interpretations.TimingConflict of Legal InterpretationsAP News

The Atmosphere in Washington: Reaffirmation of the Trump Administration

Chiu expressed gratitude for the continued support reaffirmed by President Donald Trump, noting that although there are no formal diplomatic relations, the U.S. is Taiwan's most important supporter. The U.S. administration's hardline stance against China and bipartisan support for Taiwan in Congress continue to be the foundation of deterrence.InfoMoney

Reactions on Social Media: Resonance, Skepticism, and Realism

The recent statements and the passage of the "Fujian" sparked significant reactions on social media. Here is a summary of the representative "temperature" of the responses.

• Resonance: Calls for Strengthened Deterrence
  Posts from international media and security analysts proliferated, spreading the essence of the statements. The summary that "it directly relates to regional order and U.S. interests" was prominent. Reuters' distribution and posts from Taiwanese media served as hubs for dissemination.X (formerly Twitter)

• Skepticism: Criticism of the Domino Theory
  Some commentators questioned the validity of the historical analogy, asking, "Is this a replay of the 'domino theory' from the Vietnam War era?" There were also cool-headed remarks labeling it as "fear-mongering rhetoric."X (formerly Twitter)

• Realism: A Calm Evaluation of Capabilities and Operations
  Regarding the passage of the "Fujian," many explanations focused on the technical and operational perspective of a "trial voyage of a pre-service ship," with grounded analyses shared that emphasized "look at operational maturity rather than performance," citing tracking information from Japanese and U.S. authorities.X (formerly Twitter)

• Amplification of the Chinese Narrative
  Chinese accounts emphasized "sovereignty defense" and "non-interference in internal affairs," asserting that the strait is Chinese territorial waters. Posts positioned the passage of Western ships as "provocation."Reuters

Overall, the atmosphere on social media this time is one whereresonance and skepticism coexist. While the strong term "domino effect" has the power to spread, as a policy discussion, it accumulates into theimplementation debate of "which alliances will move, when, and how." In other words, thediscussion of scenarios and costs has become more visible than ever before.

Why Taiwan Is the 'Bottleneck of the World' Now

Taiwan is a dual key point in both geopolitics (a maritime chokepoint) and industry (advanced semiconductors). If the struggle for sea and air control becomes a reality, the repercussions could be immeasurable, affecting everything from civilian high-tech to defense equipment and AI infrastructure. Particularly, the miniaturization roadmap of logic semiconductors is susceptible to being swayed bygeopolitical variables. If Taiwan's role is compromised, the acceleration of alternative investments will coincide with the global cost of **"friction costs of dispersion"** being factored into world prices.InfoMoney

What Could Happen Next: Three Scenarios

1. Strengthening Deterrence and Sustaining 'Managed Tension'
   The presence of the U.S. and its allies (navigation, joint exercises, equipment transfers) continues, while China sends external messages by mixing demonstrations with tests. Escalation management becomes the most critical issue.Reuters

2. Reacceleration of 'Supply Chain Diplomacy' Among Involved Countries
   Partner countries strengthen "combined techniques" of investment guidance, regulatory coordination, and export controls to alleviate the bottleneck of Taiwan dependence. The geopolitics of semiconductors becomes increasingly institutionalized.Reuters

3. Rising Risk of Accidental Conflict
   As the "competition of interpretations" over close navigation, information warfare, and legal warfare continues in the strait and the South China Sea, the seeds of accidents do not decrease.Strengthening crisis communication hotlines becomes key.Reuters
   
   

Conclusion: Rebuilding the Dominoes Requires Realistic 'Implementation'

The strong term "domino effect" is effective as a warning. However, what truly matters are the **implementation of deterrence (equipment, readiness, connectivity) and the implementation of the economy (redundancy, standardization, capital allocation of supply chains)**. Now that the words have created ripples, it is crucial to determine "which pieces, in what order" policy and market will support.

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