Taiwan Strait: TSMC Disruption Cascade

Scenario · TSMC disruption cascade

Disruption cascade model simulating TSMC output failure across 20,534 supply chain edges. Evaluates hyperscaler impact based on current-node reliance and inventory buffers across four parameterized scenarios.

Taiwan's leading-edge fabrication concentrates global AI compute on one island. The four scenarios here (blockade, targeted strike, power-grid failure, export restriction) quantify what changes downstream for US and allied labs when that single node is disturbed.

Supply Chain Exposure Analysis

6 TSMC fabs, 5 alternative foundry sites. Cascade propagation across 20,534 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

Price 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 a licensed supply-chain database and public filings; 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 20,534 supplier-customer edges to AI labs.

Concentration AnalysisHow concentrated is the fab layer? Country-level share for leading-edge foundry, measured HHIs for total foundry revenue and EUV lithography, plus key customer dependencies.Taiwan ~92% of leading-edge (country-level)

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, price-correlation weighting, calibration against historical precedents.