Opinion For a world economy driven by consumerism, it's become markedly unkind to consumers. This goes double – literally – for digital tech, where memory prices have increased by between 100 and 250 percent in six months. If you think GPUs are pricey now, you'll only have to wait six weeks, during which both AMD and Nvidia are expected to demonstrate supply-side economics much as the Road Runner demonstrated gravity to Wile E Coyote.
Six months and six weeks are as nothing to 2026, which took just three days to increase the chances that everything tech will look back to now as a lost golden age of availability and affordability. America's actions in abducting Venezuela's president while threatening to annex Greenland are many things, but let's concentrate on the simultaneous rejection of international laws and the concept of alliance.
Such abdication can only embolden other proponents of direct military action as primary national policy. This most certainly includes China, which just celebrated Christmas by conducting huge live-fire invasion exercises around Taiwan. President Xi Jinping is widely believed to have 2027 in mind for the actual invasion, which is bad news for Taiwan, but especially so for TSMC.
American doctrine here, as far as such a thing exists, is to reduce its fab yields to zero by using 2,000 lb kinetic contaminants via the B-2 bomber deposition process to turn them back into the sand from whence they came. This would destroy more than half the world's silicon supply and almost all of the latest circuits that drive the most active sectors in IT. It would take ten years to rebuild, assuming that this could even be done with the revenue taps turned off, the world economy in massive recession, and infrastructure scattered to the winds.
Such an event would be orders of magnitude greater than the 2021 chip supply chain sclerosis. That cost the worldwide automotive industry alone some $200 billion. Estimates vary on how much damage would be done to the world economy by the combination of chip supply chain collapse and sanctions post-invasion, with economists thinking between $5 trillion and $15 trillion. With Nvidia and Apple having a combined market cap of some $8 trillion and a shared existential reliance on the status quo, such estimates may even be optimistic. The silicon winter will be long and hard.
An actual optimistic view of the situation is that China would be among the hardest hit economically by such a universal depression. TSMC actually creates a so-called Silicon Shield, dissuading aggression. It's a comforting and plausible thought, but impossible to quantify. Xi has been resolute in calling and preparing for invasion, but is also resolute in maintaining internal stability, built to a great extent on economic growth.
How that equation works out is unknown. One of the better explanations of Chinese political motivation is Dan Wang's 2025 Breakneck: China's Quest to Engineer the Future. This points out that the upper levels of Chinese leadership have been largely composed of engineers who see governance as a series of technical issues to be solved in the molding of the nation. The US is more run by lawyers, concerned with regulation and process. How long this latter analysis remains true in 2026 is to be seen, although Wang's argument that a synthesis of the two approaches is unlikely to be tested. In engineering terms, gain and stability often work against each other, and that seems as useful an encapsulation of China's approach to Taiwan as any.
One final factor, perversely, is the recognition of the dangers of reliance on Taiwanese semiconductors. Europe, the US, and Japan are pouring state funds and encouraging other investments into local fabs capable of decoupling their economies to some extent from Taiwanese production. If this works, it will decrease the effectiveness of the Silicon Shield and change the invasion equation. It's not clear that this will work, nor if so by when – another destabilizing factor.
The final and most worrying concept is that the US's own highest levels of policy deciders will see the loss of Taiwan as a cost to be borne. There is a great air of American supremacy, along the lines of "I'm not saying we won't get our hair mussed," and that chaos is in America's own interests. It is unlikely that Greenlanders would find this implausible.
For now, it seems unlikely that the worst case will come to pass. It's just impossible to know how long now will last. On a pragmatic level, the question is whether it's worth turning into a digital prepper and buying the fattest, fastest tech you can afford right now, even as prices plump up. There may be a 20-year upgrade cycle coming. Still, look on the bright side. You'll be able to stop worrying about that AI bubble. ®
Source: The register