Taiwan is Arrakis
AI-centric autonomous weapons systems are Taiwan's answer to a more robust defense.
In the science fiction adventure Dune, just as the desert planet Arrakis holds the universe's most coveted treasure - “spice” - Taiwan possesses an asset of immense strategic value in the real world. In Dune, spice not only grants extended life and even prescient abilities, but is essential for interstellar travel.
Arrakis is home to the Fremen, who believe Paul Atreides to be "Lisan al-Gaib," the Voice from the Outer World. His arrival fulfills the prophecy of a savior who will lead them to freedom. This prophecy, intertwined with the invaluable spice found only on Arrakis, makes the planet the most strategically vital in the universe.
In today's world, where artificial intelligence is rapidly advancing, semiconductors are the real-life equivalent of spice, and Taiwan holds a strategic importance akin to Arrakis in Dune.
Taiwan Semiconductor Manufacturing Company (TSMC) plays a critical role in this technological landscape. TSMC holds a near monopoly in meeting the advanced manufacturing needs of U.S. fabless semiconductor companies. This concentration of production gives Taiwan enormous geopolitical significance, mirroring Arrakis's control over spice, with access to advanced semiconductor manufacturing shaping the balance of power in the age of AI.
However, time is of the essence. Although the risk to Taiwan from Chinese military aggression is on policymakers’ radar, this threat warrants more immediate attention and understanding than is currently the case. As it stands, without an expansion of U.S. foundry capacity sufficient to meet its advanced semiconductor manufacturing needs, ceding control of Taiwan to China or allowing the destruction of TSMC's foundries in a Chinese invasion would be an extraordinary strategic loss for the United States and its allies.
Facing an Increasing Risk of Chinese Aggression
Since I lived in Taiwan for nearly six years, and experienced first-hand the People’s Republic of China (PRC) conduct live missile tests off the ports of Keelung and Kaohsiung, the risk of Chinese military aggression has steadily increased and now is further accentuated by TSMC’s enormous strategic value.
A China-Taiwan conflict would have devastating economic consequences. If China were to attack Taiwan and destroy TSMC's foundries, there is simply no comparable alternative source of advanced semiconductor manufacturing capacity to replace this loss. Companies like Nvidia, AMD, Cisco, Tesla, and Apple rely heavily on TSMC's production. Without access to these critical semiconductor components, they would face severe disruptions to production.
The economic repercussions would be massive. Bloomberg Economics estimates the cost of a China-Taiwan war at $10 trillion, roughly 10% of global GDP with the risk that the economic fallout could exceed this estimate.
Deterrence Through Technology
The question is, how can Taiwan diminish the risk of a future Chinese invasion and establish a sufficient deterrent so that Beijing will not risk a failed invasion?
The answer lies in partnering with defense technology companies and aggressively embracing AI-centric autonomous weapons systems. Like cyberwarfare, these systems can level the playing field. The future of defense rests on software-centric, lower-cost autonomous weapons that empower smaller nations to leverage technology for a more robust defense against larger militaries.
This rapid growth in demand for autonomous weapons systems presents an opportunity for emerging defense technology companies, such as Anduril Industries (founded by Palmer Luckey, the founder of Oculus VR), Saronic, Skydio, and Shield AI.
This strategic shift toward greater adoption of scalable autonomous weapons systems is also poised to be further embraced by the U.S. military, as proponents of this strategy will have significant influence in the new Trump administration.
To ensure the success of this new defense strategy centered on lower-cost, autonomous weapon systems, the U.S. must develop a secure supply chain capable of rapid scaling. A credible deterrent requires not only a sufficient stockpile of munitions and weapons but also the capacity to replenish them quickly. However, current estimates indicate a critical vulnerability: in a conflict with China, the U.S. would exhaust its vital munitions and missiles within days, lacking the ability to replenish them promptly.
Legacy defense contractors are ill-suited to meet the future needs of the U.S. and its allies' militaries. These militaries require suppliers who can rapidly develop and deploy software-centric, autonomous weapon systems at competitive costs and meet project timelines. For example, the U.S. Navy contracted Boeing to build the Orca, a large autonomous undersea vehicle. The Navy originally agreed to pay $379 million for five Orcas and a test prototype. However, this project's cost has increased to a reported $620 million and is years behind schedule, illustrating the challenges legacy defense contractors face in meeting the evolving needs of modern warfare. The battlefield of the future requires suppliers capable of producing a large volume of lower-cost, AI-centric autonomous systems that can be rapidly replenished.
Taiwan policy under the Trump Administration
President Trump’s comments made during the presidential campaign have led some to question the commitment of the new Trump administration to Taiwan’s security. However, it’s highly unlikely Trump would pursue a policy that increases the risk of a China invasion of Taiwan, an event which would bring significant damage to the U.S. economy and greatly diminish U.S. power and influence in the Asia Pacific region. Like many topics with Trump its more useful to watch what he does than what he says. The National Security team Trump is putting in place has China hawks in a number of key positions and is a more concrete set of data points to determine the direction of the administration’s China policy and stance on Taiwan.
Additionally, Trump’s recent threat of imposing tariffs on semiconductor imports from Taiwan has raised an new concern. However, this concern is probably overstated and unlikely to materialize due to the industry structure and the fact that U.S. companies account for most semiconductor imports. These comments likely reflect the primary objective to expand U.S. semiconductor advance manufacturing. The aim is to shift policy and have these investments fully funded by the highly profitable semiconductor industry rather than incentivized by subsidies.
While expanding U.S. semiconductor manufacturing is strategically sound, it will realistically take years to achieve. Consequently, U.S. dependence on TSMC for manufacturing advanced semiconductors will remain unchanged in the medium term. Nevertheless, President Trump is correct in pointing out that Taiwan should be spending more on its defense.
The Escalating Threat and Taiwan’s Response
Following Russia's invasion of Ukraine, concerns about a Chinese invasion of Taiwan have further increased. These concerns are heightened by Chinese leader Xi Jinping's stated goal of completing the modernization of the country's military by 2027, setting the stage for a potential invasion and annexation of Taiwan. In Xi’s recent New Years address, he once again reiterated the country’s unwavering stance on Taiwan saying that “no one can ever stop China’s reunification.” This intensifying threat also has been evident in more frequent larger scale PRC military exercises around Taiwan.
However, this could continue to remain only a threat for years to come if Taiwan builds up a sufficient deterrence to dissuade China from attempting any form of military aggression.
Rethinking Taiwan's defense posture and boosting defense expenditures requires a greater sense of urgency. Compared to Israel, which also faces an existential threat and spends on average over last several years approximately 5% of GDP on defense, Taiwan spends only about 2.5%. While Taiwan has increased defense spending, much of this has gone towards higher wages to recruit and retain military personnel.
The emergence of China as a global challenger puts the U.S. and its allies at a disadvantage in a prolonged conflict, as its diminished industrial base currently lacks the capacity to replenish military munitions and hardware, unlike China, whose manufacturing capacity dwarfs that of the U.S.
Taiwan's military relies heavily on large weapons platforms, primarily supplied by US defense contractors with delivery of the weapons plagued by long wait times and delays. Furthermore, these platforms may be inadequate to repel a Chinese amphibious invasion or be replenished in the necessary volumes during a conflict.
Taiwan needs to more urgently shift its defense strategy, emphasizing weapon systems better suited to countering a Chinese invasion. This approach aligns with the "porcupine strategy," which focuses on asymmetric warfare against Chinese forces, emphasizing a larger volume of lower-cost, mobile, and autonomous systems.
The war in Ukraine provides a real-world example of how Taiwan can leverage autonomous weapon systems. These systems can supplement existing forces and provide valuable military capabilities, especially when facing a larger adversary. This conflict has demonstrated how these cost-effective weapon systems can be force multipliers against a larger military foe.
While less expensive than large-scale weapons systems, these autonomous systems can be just as lethal and are potentially better suited to Taiwan's defense needs. The capacity to unleash a flood of aerial drones and autonomous undersea weapons would present a step change in Taiwan’s capacity to defend the island against a Chinese amphibious invasion.
Defense Tech: A New Hope for Taiwan
Emerging defense technology companies are an answer to Taiwan's need to bolster its defensive capabilities in short order. More broadly, these companies such as Anduril, Shield AI, Saronic and Skydio also feature compelling long-term growth profiles. This cohort of defense tech companies are set to disrupt the defense industry and how the U.S. and its allies approach military systems and strategy.
Anduril as a software-first, AI/autonomous-focused defense products company has established a leadership position among emerging defense tech firms. Its Lattice software system, an AI-powered, open platform, serves as the central nervous system across its entire product suite. Anduril's recently announced Lattice software system partnership program allows other companies to integrate their technologies and capabilities with the platform, positioning Lattice to emerge as the operating system standard for the defense tech industry.
A software-centric approach to military hardware architecture allows for simplified designs and enables more frequent updates to existing products. This approach allows for defense systems and weapons to use lower-cost components readily available from existing commercial suppliers, avoiding expensive and specialized components used in most legacy weapons systems. Nearly 90% of the company’s products can be produced using commercially available components and materials, making production of these weapon systems highly scalable. This approach to defense system development and production could enable Taiwan to quickly bolster its defense capabilities and in the event of a conflict more rapidly replenish its stock of munitions and weapons systems.
Interestingly, Beijing already views emerging U.S. defense technology companies as a threat. This past July, Anduril and several other American defense tech companies and these companies’ senior executives were sanctioned by the PRC. Subsequently China has followed up with additional rounds of sanctions imposed against a growing number of U.S. defense contractors, while also blocking the sale of unspecified dual civilian and military use components to a further 28 companies.
Hopefully, in providing Taiwan with a sufficient volume of AI/autonomous weapons systems, in Anduril and its defense tech peers Taiwan will find a means to liberate the island from the threat of a China invasion just as “Lisan al-Gaid” liberated the Fremen in Dune.
A Perpetual Risk of Invasion
The pro-independence leaning Democratic Progressive Party as the dominant party in Taiwan coupled with ongoing U.S.-China semiconductor related trade tensions has further heightened the future risk of a Chinese invasion. However, this threat to Taiwan is not new; it has persisted since the end of the Chinese Civil War and the retreat of the KMT following the communist victory on the mainland.
The Taiwan Relations Act of 1979 was put in place following the U.S formal recognition and establishment of diplomatic ties with the PRC. However, the Taiwan Relations Act falls short of offering the explicit military protections provided from 1955-1980 in the Mutual Defense Treaty between the U.S. and Taiwan, placing the U.S.-Taiwan policy relationship in what has been referred to as a state of strategic ambiguity.
While the U.S.-Taiwan policy relationship has historically involved some degree of strategic ambiguity, the emergence of China as a global competitor and the critical strategic value of TSMC make deterring a Chinese invasion of Taiwan a clear imperative.
The Center for Strategic & International Studies (CSIS) published a detailed report in January 2023 outlining its findings from simulated wargames of a Chinese amphibious invasion of Taiwan. The simulations explored different scenarios and, in most scenarios, required a joint effort by U.S., Taiwanese, and Japanese forces to defeat a conventional amphibious invasion by China. However, this victory came at a steep cost, with significant loss of life, destruction of military hardware, and a devastated Taiwanese economy, not to mention the risk of the conflict escalating beyond the Taiwan Straits.
As with most potential military conflicts, the most effective way to avoid war is to establish a strong deterrent, convincing the aggressor that any military aggression is likely to fail. Building such a deterrent is the challenge faced by Taiwan. A conflict that escalates to involve the U.S. must be avoided at all costs. Taiwan has it within its means to make the necessary investments to build a more robust and effective deterrent.
Taiwan should more aggressively pursue a defense posture that leverages AI and autonomous weapons systems. This approach would ensure that Taiwan can mount a robust defense, making the island less dependent on conventional ground forces and military capabilities, and more resilient to a Chinese assault such that Beijing will not risk a failed invasion.