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One, it completes one of their long standing policy of "one China". They still view Taiwan as a rogue rebellion state to bring back into the fold, not an independent country to conquer.
Two, it would cripple a lot of the west's high end silicon industry. TSMC is the only one that can make the worlds most advanced nodes, as well as Taiwan holds chip packaging infrastructure that any other nodes require on to be useful.
To that end it is a geopolitical chip that China can use to pressure the west, but likely will never act upon until a real hot war breaks out.
It would cripple it now but TSMC has started building Fabs in North America— but it would certainly cripple its output in the short term— then again, the U.S governments current incompetence not withstanding, you would think that if that ever happened the U.S would be able to emergency build Fabs within a few (2-4?) years if necessary.
The fabs themselves aren't the only limiting factor on modern lithography, skill is the bigger one; this stuff is probably more complicated than rocket science. We US engineers dont have the skills to run a competitive fab in the US, that takes many years of losing money to be developed. Intel has bigger better EUV machines than TSMC but they just cant compete and intel keeps laying off their engineers constantly which is a very bad signal.
Also, last time I was reading on the topic TSMC doesn't plan to produce advanced chips on their US fabs to gatekeep their knowledge.
Do they ? I thought they were pretty late on the EUV train, so maybe now they may have more modern machines than tsmc but they clearly lack the expertise to make the most out of it