TSMC Risk | Stratechery by Ben Thompson

TSMC Risk was published on Monday, January 26th, 2026. You probably think given this title you know what this article is about. The most advanced semiconductors are made by TSMC in Taiwan. And Taiwan is claimed by China, which has not and will not take reunification by force off of the table. Relatedly, AI obviously has significant national security implications. At Davos, Anthropic CEO Dario Amodei reiterated his objection to the US allowing the sale of Nvidia chips to China. From Bloomberg: Anthropic chief executive officer Dario Amodei said selling advanced artificial intelligence chips to China is a blunder with quote incredible national security implications. End quote. As the US moves to allow Nvidia Corp. to sell its H200 processors to Beijing, quote, it will be a big mistake to ship these chips. End quote. Amodei said in an interview with Bloomberg editor-in-chief John Micklethwait at the World Economic Forum in Davos, Switzerland. Quote, I think this is crazy. It's a bit like selling nuclear weapons to North Korea. End quote. The nuclear weapon analogy is an interesting one. A lot of game theory was developed to manage the risk of nuclear weapons, particularly once the USSR gained or stole nuclear capability, ending the US's brief monopoly on the technology. Before that happened, however, the US had a dominant military position given we had nuclear weapons and no one else did. Perhaps Amodei believes the US should have advanced AI and China should not, giving us a dominant military position. The problem with that reality, however, is Taiwan. As I explained in AI Promise and Chip Precariousness, AI, in contrast to nuclear weapons, has a physical dependency in Taiwan that can be easily destroyed by Chinese missiles even without an invasion. If we got to a situation where only the US had the sort of AI that would give us an unassailable advantage militarily, then the optimal strategy for China would change to taking TSMC off of the board. Given this dependency, my recommendations in the article run counter to Amodei. I want China dependent on not just US chips, but also on TSMC directly, which is why I argue in favor of selling Nvidia chips to China and further believe that Huawei and other Chinese companies ought to be able to source from TSMC. On the flip side, I would ban the sale of semiconductor manufacturing equipment to Chinese fabs. I think it's a good thing the Trump administration moved on the first point at least. However, this risk is not what this article is about. There is another TSMC risk facing the entire AI industry in particular. Moreover, it's a risk the downside of which is already being realized.

The TSMC Brake. There was one refrain that was common across big tech earnings last quarter: demand for AI exceeds supply. Here was Amazon CEO Andy Jassy on the company's earnings call.

Here is Microsoft CFO Amy Hood on the company's earnings call.

Here was Google CFO Anat Ashkenazi on the company's earnings call.

Here was Meta Mark Zuckerberg on the company's earnings call.