It May be Time to Prepare for War Over Taiwan

Dec 27, 2022

Growing tensions over Taiwan could lead to an attack.

That means we should start preparing our portfolios now.  For one, Taiwan manufactures about 65% of the world’s semiconductors, and about 92% of advanced chips, which could lead to a severe issue. In fact, some of the biggest semiconductor companies in the world could be hurt.

That could include Taiwan Semiconductor Manufacturing (TSM), United Microelectronics (UMC), ChipMOS Technologies (IMOS), AU Optronics (AUOTY), SemiLEDs Corp. (LEDS), and many more.  Two, a ton of Taiwan stocks and ETFs could come under pressure again. Three, war over Taiwan could send major indices significantly lower.

Unfortunately, war may be nearing.

All after China dispatched jet fighters near Taiwan in response to provocation from the U.S., and Taipei, says The Wall Street Journal.  “A total of 71 Chinese warplanes were detected flying in the region surrounding Taiwan, with a few dozen crossing the median line of the 100-mile-wide Taiwan Strait that separates the island from mainland China, according to Taiwan’s Defense Ministry. The ministry also said it detected seven Chinese naval vessels in waters near Taiwan on Sunday.”

China is also criticizing the latest $858 billion defense bill, which would authorize up to $10 billion over the next five years to finance sales of military equipment to Taiwan. Tensions could flare even more if House Minority Leader Kevin McCarthy (R., Calif.) visits Taiwan – should he become House Speaker – “a move that specialists on Chinese affairs said would almost certainly prompt Beijing to stage more displays of force.”

At the same time, the U.S. and Taipei are criticizing China’s latest move, calling it provocation as well.  The White House’s National Security Council said the latest move “is destabilizing, risks miscalculations, and undermines regional peace and stability.”

Let’s just hope tensions begin to cool off.

Heading into New Year 2023, we shouldn’t have to worry about war with China, or even Russia.


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