US warns Taiwan chip concentration risks global economy collapse

The United States has identified Taiwan’s overwhelming share of advanced semiconductor manufacturing as the most fragile point in the global economy, warning that a serious disruption could have far-reaching consequences. Addressing the World Economic Forum in Davos, Switzerland, US Treasury Secretary Scott Bessent said the concentration of high-end chip production in a single location poses a major strategic and economic risk for global supply chains.

Semiconductors and supply chain risks

Bessent told participants that roughly 97% of cutting-edge chips are produced in Taiwan, describing this imbalance as a “single point of failure” for the world economy. He argued that any blockade or damage to the island’s manufacturing capacity would amount to an economic disaster, underscoring Washington’s push to expand semiconductor production inside the United States and reduce dependence on East Asian supply hubs.

Critical minerals and China factor

The Treasury secretary also announced efforts to build a critical minerals partnership involving the G7, Australia, India, Mexico and South Korea. The aim, he said, is to dilute China’s influence over mining, processing and refining of key resources used in high-tech industries. As an example, he pointed to the revival of rare earth magnet production in South Carolina, noting that domestic suppliers expect to meet most US demand within two years.

Tariffs, Greenland and NATO pressure

Bessent confirmed that Washington plans to impose tariffs on several European countries over the Greenland dispute, aligning with President Donald Trump’s strategy of using trade measures to advance security goals. He defended US pressure on NATO allies to raise defence spending, arguing that Europe has long prioritised social programmes over military budgets while the US has carried a disproportionate financial burden.

Trade talks with Beijing

On relations with China, Bessent said negotiations have produced results, including large-scale soybean purchases and progress on rare earth exports. He added that tariff threats have proven effective in compelling cooperation on issues ranging from supply chains to fentanyl precursors, dismissing concerns that US courts would derail the administration’s trade agenda, developments monitored closely by trade partners including Türkiye.