Taiwan Strait: TSMC Disruption Cascade

Disruption cascade model simulating TSMC output failure across 17,900+ supply chain edges. Evaluates hyperscaler impact based on current-node reliance and inventory buffers across four parameterized scenarios.

Taiwan's dominance of advanced fabrication concentrates global AI capability at a single node. This assessment quantifies how TSMC output changes reshape downstream access for US and allied AI development under blockade, strike, and embargo scenarios.

Supply Chain Exposure Analysis

6 TSMC fabs, 5 alternative foundry sites. Cascade propagation across 17,900+ supply chain edges; substitution gap 85-95% for advanced process node capacity. Active: Naval BlockadeTaiwan manufactures over 90% of the world's most advanced AI chips. Four disruption scenarios model how that concentration translates to downstream risk. Active: Naval Blockade

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Severity

FactSet correlation

Taiwan manufactures over 90% of the world's most advanced AI chips at TSMC fabs that no combination of alternative foundries can replace within 3–5 years. The cascade engine propagates each disruption through 0 real supply-chain edges from FactSet Revere · WRDS; substitution capacity outside Taiwan covers under 20% of advanced-node demand under any of the four scenarios below.

Methodology →Calibrated against 1999 Chi-Chi · 2011 Tohoku · 2016 Kumamoto precedents

Active scenarioNaval Blockade

Supply Chain CascadeAnimated propagation: how the disruption ripples outward from TSMC fabs through 12,695 supplier-customer edges to AI labs.

Concentration AnalysisHow concentrated is sub-5nm fab capacity? Market share + HHI for advanced-logic, HBM, lithography, and key dependencies.Advanced-logic HHI ~8,500

Substitution PathsWhich alternative foundries can absorb TSMC demand at each process node, and where capacity falls short of viability.6 paths

Sovereign Program CascadeSovereign AI programs (Stargate, EU AI Factories, etc.) ranked by their TSMC-Taiwan dependency and substitution exposure.

Temporal CurvePer-week affected-compute trajectory with empirical buffer-range uncertainty band; inflection points (buffer exhaustion, substitution ramp).

Chinese SubstrateHow close SMIC + China-domestic alternatives sit to TSMC parity, by node generation and equipment-access constraints.

Crisis EnforcementBIS / OFAC / Section 232 enforcement levers and historical precedent for escalating Taiwan-related controls.

Scenario DetailsReference cards for each of the four disruption profiles — severity, affected fabs, time-to-impact, historical precedent.4 scenarios

MethodologyBFS propagation engine, severity / decay parameters, FactSet correlation weighting, calibration against historical precedents.