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Justin Sherman
Podcast i'm justin sherman contributing editor at lawfare and ceo of global cyber strategies with sam bresnik research fellow and andrew w marshall fellow at georgetown's center for security and emerging technology and author of the new report big tech in taiwan beyond semiconductors what you can't do very.
Sam Bresnik
Quickly is reconstitute huge complex supply chains that span many countries that are deeply embedded in a place like china and where there are you know in taiwan where there's a huge amount of expertise in electronics manuf today we're talking about.
Justin Sherman
Us big tech firms their investment supply chain and other engagements in and exposures to taiwan and the future risks in the event of a conflict with china i know you've been on this show before for those who haven't listened or are less familiar with your work why don't you start by telling us about yourself and your current research great so.
Sam Bresnik
I'M a research fellow at the center for security and emerging technology at georgetown university been here for about two and a half years i have a background in china studies most of my work at cset concentrates on how the chinese government the chinese military is thinking about the national security applications of artificial intelligence and other emerging technologies so i look at a lot of chinese academic literature look at other data sources to get a sense of how china is trying to develop and deploy ai enabled systems but i also have a prong of research that has to do with the role of big technology companies in conflict which this report is part of this.
Justin Sherman
Report you referenced as we heard in the opening is out from cset at georgetown titled big tech in beyond semiconductors and it looks at what you just alluded to how seventeen leading us tech companies are both economically and operationally entangled with taiwan so before we get into the report itself frame this for us a little bit and i'm talking here at the thirty thousand foot geopolitical level what motivated this paper and what concerns do you have vis a vis taiwan and us big tech companies we're at.
Sam Bresnik
A very interesting moment where technology companies are playing an increasingly important role in modern conflicts and so this paper was really motivated by by observing how us technology companies supported the ukrainian government and military at the outset of russia's full scale invasion of ukraine in early twenty twenty two many of these companies provided capabilities that even the us military could not provide i'm talking starlink satellite internet palantir helping with targeting and other companies like maxar and capella space providing satellite imagery to track the russian military buildup and then tr and then other companies like amazon and microsoft that were involved in various kinds of cyber defense so this paper was really motivated by an interest in trying to figure out whether these same technology companies that supported ukraine against russia could actually support taiwan against china and we'll get into this but essentially the big takeaway is that it is going to be much more difficult for a variety of reasons for us technology companies to support taiwan than it was for them to support ukraine let's.
Justin Sherman
Start with those companies you just gave a little bit of context on how you selected them what are those seventeen companies first of all and then and then if you want to give any more color on that process of identifying which ones to look at in this.
Sam Bresnik
Study so there's a range of companies we identified them by looking at reporting on which companies provided aid to ukraine toward the outset of the of the war war there's a range of companies right there are big technology companies like amazon google microsoft apple there are other software companies that are not normally thought of as big tech a la cisco and oracle and then there are a bunch of defense tech players whether that's palantir or you know companies like capella space maxar these satellite imagery companies and then other ones like fortem technology so there are a bunch of companies that basically toward the outset of the war provided aid largely pro bono to the ukrainian government that really helped ukraine repel the the early russian invasion and maintain some government functions toward the outset of the war and i would say several of these companies have continued to support ukraine but you know the reporting on on their activities has diminished as the war has has dragged on here before.
Justin Sherman
You did this paper and again we're going to turn more to this in a second focused on taiwan exposure you looked at a similar set of companies and china exposure in a study published last year called which ties will big tech lessons from ukraine and implications for taiwan so what did that study cover and sort of as context what were the findings on those companies exposure to.
Sam Bresnik
China so that study was the first half of the big study that includes this relatively new taiwan paper in that paper we identified these companies that provided ukraine with support we looked at their pre invasion footprints in russia we looked at their pre invasion footprints in ukraine and then we looked at their footprints as of twenty twenty two twenty twenty three twenty twenty four early their footprints in china and we were trying to get a sense of what are the factors that seem to be playing a role in corporate decision making regarding getting involved in conflicts and what we did was we looked at a range of variables we looked at supply chains we looked at revenue we looked at research and development cloud computing employees in different countries and what we found essentially in that paper justin was that these companies largely did not rely on russia at all for any of their business functions russia was not a player in supply chains they didn't make a lot of money in russia russia was not an r and d player at all and even though they did not have a big footprint in ukraine most of these companies decided to get involved essentially because the costs of doing so weren't very high they didn't lose a lot of business there was a broad support for ukraine against russia they thought it was politically easy for them to support ukraine and also i think to some degree there was a desire to exploit a business opportunity but what we found in this paper of course is that the story for china is not nearly as simple because a lot of these companies we focused on eight in that paper had really deep ties to china and that was across this range of variables so for example when we wrote that piece apple and tesla were making about twenty percent of their revenue in china apple and tesla again especially had deep supply chains in the country amazon and microsoft were doing significant ai and software research in china and several of them had a lot of employees there as well and so what we essentially found was that the decision to support taiwan in a potential you know hypothetical contingency was going to be much more difficult because these companies would expose themselves to chinese coercion chinese retaliation and so this paper that we're going to discuss more in depth is trying to you know round out the picture of what these companies are dealing with in china taiwan potential future contingencies it's a really important.
Justin Sherman
Point and i and again i encourage folks to we'll link both of these papers but i encourage folks to check it out because i appreciate as you're saying the degree to which you and your co authors flesh out that that detail it is sort of interesting right of course there are parallels in some ways with you know ukraine or taiwan kind of scenarios at the same time it's apples and oranges these two these two tech sectors so so so turning now to this new recently published paper on taiwan you look at the companies you referenced across several different areas data on greenfield foreign direct investment research and development centers data centers supply chains revenue and job postings so if we take some of these in turn which companies had particularly high fdi expenditures in taiwan and how high is high if you have some of the numbers just just for context and which companies had the lowest fdi expenditures and similarly what were those lower range numbers many of the.
Sam Bresnik
Companies that we focused on or that we covered in this report do not have any publicly identifiable greenfield foreign direct investment into taiwan now that is partially you know by design i will make this point now so i don't have to repeat it every time but this deals with mostly nine companies the other eight we basically did not find any evidence that they had operations business ties with taiwan at all and i will say some of that is by design like in the other paper many of the companies also did not have any footprint in china and this is because especially for the defense tech companies they want to have a lot of maneuverability in their decision making regarding a china taiwan conflict so the majority of the companies that we focused on are bigger companies right in this taiwan paper the majority of the analysis looks at google amazon microsoft and apple because those are the four with the biggest footprints by by this range of variables in taiwan turning to your fdi question google was the company with the highest degree of fdi they had about one point four billion dollars of fdi in tai it might sound like a lot it's also probably an overestimate because the data source we were using captured announced fdi into two data center projects that appear not to be running so even if you look at the high end of one point four billion or so google has made over one hundred billion dollars globally in fdi and so that works out to you know a little over one percent of google's total the other companies apple was around four hundred million and then amazon and microso were in the mid two hundred upper two hundred million so for all of these companies fdi is not going to be i don't think a big factor in their calculations because they they already are worth so much money and most of their foreign direct investment has gone elsewhere how did.
Justin Sherman
The companies rank in terms of their r and d centers and their data centers and given the range of companies you cover apple cisco maxar so on what do these r and d centers if we know as well as data centers actually do in practice you know that is how critical would it be if they were potentially at some future point disrupted it can be kind of.
Sam Bresnik
Difficult to discern just how important individual r and d centers are to each of these companies but of course their existence in certain countries or territories connotes a company's belief that it can benefit from conducting r and d in that place right so it appears as though taiwan has become an important hardware research and development base for companies like apple and google one google executive is on the record sharing that the island has become the company's second most important hardware research and development base outside the united states and apple also has partnered with many taiwanese companies including tsmc right taiwan semiconductor manufacturing company to develop technology for advanced displays on the island taiwan is of course a hardware r and d power player because it plays a big role in electronic supply chains not only in asia but global electronic supply chains and it is the leader in advanced semiconductor production so it makes sense that companies that are involved in the production of hardware i mentioned apple and google but it stands to reason that microsoft also has a big interest here as well so you know it makes sense that r and d on the hardware side would be happening in taiwan one of the companies microsoft in particular also seems to have some ai research activity on the island but that appears to be somewhat less important than the hardware side but of course it stands to reason that hardware r and d processes could be disrupted due to a taiwan contingency at least in the short term which could cause these companies some some issues moving to data centers i think this is a really interesting area google stands out as having had the longest data center presence in taiwan it opened a data center in changhua county in twenty thirteen and just over the last few months microsoft and amazon have opened their own data centers and apple is reportedly building one these reveal that at least in part taiwan is becoming an increasingly important player in software and ai right these companies are building data centers all over the place so i don't think these constitute a big vulnerability for these companies right amazon has over two hundred and fifty global data centers microsoft has around eighty google has fewer but still a lot so even though these companies are building data centers in taiwan you know it's unlikely that they will be that they will form like a significant decision block for these companies and.
Justin Sherman
How do you assess with these taken together and then some of the other data points you examined in the study how do you assess the seventeen companies supply chain or i suppose the subset that you say have have a presence there how do you assess their exposure in the supply chain writ large to.
Sam Bresnik
Taiwan this seems to be the most important piece of exposure to you know a taiwan china contingency apple in its twenty twenty three supplier information which is the most recent one it has about twenty five percent of its suppliers or it reports that around twenty five percent of its suppliers are producing goods for apple in taiwan and then around a third of microsoft's top one hundred suppliers from its most recent list are either headquartered in taiwan or are subsidiaries of of taiwan headquartered companies amazon has a little bit less of an exposure amazon tends to have more suppliers because it is involved in all kinds of production right it's not only electronics all of the amazon branded goods are in its supply chain and so taiwan is not a country that makes sort of tables or clothes or things that you might buy on amazon but that said the supply chain story is extremely important and links to the china paper very closely because between china and taiwan you know these two places are really the the heart in a lot of ways of the global electronic supply chain and so even if there is some kind of de risking that goes on right which is ongoing on some level it's going to be very difficult to completely remove the risk to these companies from a taiwan china contingency because these companies from from both china and taiwan play such an important role in electronics manufacturing so this is an area to really watch over the next few years because if there's a contingency you know china could hold taiwanese companies that are producing in china at risk a conflict could potentially imperil production of electronics on taiwan and so you know supply chains seem to be they're going to be a really important part of companies decision calculus in.
Justin Sherman
A future potential conflict obviously plenty of listeners are following what you're saying but can you just briefly when you say de risking give us a little more context on what you're referring to there vis a vis these tech supply chains.
Sam Bresnik
So the us government and a lot of these companies given the increasing geopolitical risks surrounding taiwan are working to move supply chains really mostly from china to other parts of the world particularly south asia and southeast asia vietnam has become a real electronics manufacturing hotspot and india now is making a very considerably large portion of iphones at this point especially for the us market and so the idea behind de risking is that if you move supply chains out of china and also possibly out of taiwan which which some companies like tesla and spacex are actually asking for too if you move those supply chains to other parts of the world you are not exposed to risk from a taiwan china contingency in the same way and i think this is partially true but it's also more complicated than that because even if you move the factory that actually assembles the iphones to india let's say from china a vast portion of the parts that go into an iphone are still going to be made in china and that's true for the foreseeable future so de risking isn't just as easy as plopping a new factory outside of china or taiwan it's going to take years and investments in order to actually move the supply ecosystems into these other places so de risking is definitely important but it's not going to be accomplished for several years if really ever but these companies are working to de risk quote unquote their supply chains in the near.
Lawfare Host
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Justin Sherman
Thank you for that and i want to come back to several of the things you just mentioned later one of the other many interesting details to potentially pull out of this study something that certainly remains very top of mind in my own case given russian coercion of us tech company personnel on the ground are the labor force footprints that you chart in taiwan for these american firms which of the companies had had or have i suppose the biggest labor footprint in taiwan which have the smallest and do we know if these are mostly personnel that they've hired from within taiwan or these folks brought in from elsewhere in the world and so on so.
Sam Bresnik
It'S very hard to get really granular data on workforce in in taiwan or really in a lot of countries that said we used job postings as a proxy and then also did a lot of research on you know whether various executives had shared details and so both by job postings and you know through through open source research it seems that google has the the biggest taiwan based workforce of any of these companies one of their executives shared that they now have thousands of employees from over thirty countries in taiwan you know google is an interesting case because it had a few scandals in its china business or related to its china business several years ago and made the decision to you know wind down several projects there it had an ai research lab that it closed it was working on a search engine designed for the chinese market for which they got a lot of flack and it seems that they have you know still some business in china but they have made taiwan its sort of greater china hub but many companies do not seem to have any employees there at all and then several of the other you know sort of big tech companies have seem to have a range right a lot of the people working for these companies there seems to be a split between the technical staff right given the the hardware chops of taiwan the semiconductor industry there there are a bunch of hardware engineers that they were advertising for but then also you know companies like tesla need technicians to repair vehicles there and then you know apple has a couple stores there and would need retail representatives there so there's a split between the more technical staff and the sort of more retail or service.
Justin Sherman
Oriented group stepping back a little bit now looking across these risk areas fdi r and d centers supply chains etcetera what national security or geopolitical risks stand out the most to you and i'm curious how you weight your own findings are there particular factors you mentioned this a little bit but are there particular factors such as supply chains or r and d centers that open up a us tech firm to more exposure or coercive pressure compared to other factors you.
Sam Bresnik
Looked at definitely and you you mentioned it a little bit in that question supply chains seem to be the number one pain point for these companies and why do i say that a lot of these companies make very little money in taiwan compared to their global sales if they lose a data center or you know their revenue in taiwan that is not an existential risk for these companies if they lose their r and d centers that is probably an issue but more in the short right because you know you can reconstitute research labs somewhat quickly but what you can't do very quickly is reconstitute huge complex supply chains that span many countries that are deeply embedded in a place like china and where there are you know in taiwan where there's a huge amount of expertise in electronics manufacturing and so so should there be a contingency and should these companies feel like they should they get involved here and support taiwan even if they believe that's the right thing to do china could hold at risk their entire manufacturing operation or huge chunks i should say of their manufacturing operations which would make it very difficult for them to continue to build and sell their products you know which would which would dwarf their losses of revenue in in china and taiwan the other big issue justin that this report does not really get at but is clearly a huge issue is the advanced semiconductors from taiwan right the subtitle of the report is beyond semiconductors it's clear that losing access to advanced taiwanese semiconductors would be a huge issue for several of these companies but this report really doesn't focus on that because there is so much analysis of the the semiconductor choke point on taiwan but in general supply chains are a huge issue much more so than cloud computing infrastructure revenue workforce it seems to dwarf these other issues for.
Justin Sherman
These companies you note that in some cases and in some areas some firms are actually expanding their entanglements with taiwan which you write might make good business sense but comes with as we're talking about a multitude of risks be they technological or economic or geopolitical and so on what are some of the reasons us tech firms keep expanding their taiwan footprints even in the current moment and what is your sense of how different companies just at a general level might be weighing these factors are they perceiving that the economic benefits are just greater than the security risks is it a sort of naivete or lack of recognition of the geopolitical issues or perhaps other.
Sam Bresnik
Reasons we have to some degree entered a new geopolitical era here where geopolitics may in some ways condition corporate decisions but i don't think we're fully in that era yet we just saw right with the reversal of the nvidia h twenty ai chip ban which was clearly a win for players in silicon valley wall street but rankled a lot of national security experts that there's still this conflict between the national security community and the business community and over the last few years with export controls it seems like or it has seemed like the national security concerns were winning out to some degree but i think this is largely an unsettled arena of conflict and i would say you know these companies as of now are making decisions there might be a degree of naivete but i do think if you're sitting in you know the headquarters of these these big technology companies you're thinking taiwan you know is is a is a somewhat large developed economy it's very technologically savvy it's got thriving digital economy it's a leading electronics manufacturer and semiconductor producer it's got a very tech savvy workforce and i think these companies know that right outside of supply chains which have been entangled with taiwan and taiwanese companies in china for quite a long time the risks of marginally expanding their operations on the island do not constitute existential considerations right these are not existential risks for them and could lead to you know solid profits growth what have you and of course right war is not imminent right we don't know for sure that there is going to be a conflict over taiwan and so given the fact that these companies think they can make money there it's an attractive place to do business it just sort of makes business sense for them to do given the fact that the risks are not.
Justin Sherman
Existential that makes sense and it's again i think underscoring what we were getting at earlier in terms of there are parallels right fight with us tech exposure to the russian market yet it's really also a totally different animal zooming out and as someone who not only wrote this report but studies this issue broadly do you think there are parallels between how tech firms responded to russia's full scale invasion of ukraine and how they might respond to a chinese invasion of of taiwan i mean we've been talking about this but just to ask it explicitly and if so how strong are those parallels or if there are not good parallels perhaps you know how might you think us tech firms respond in this different scenario i'll give you a.
Sam Bresnik
Couple different things to think about with my answer the first thing is i think there is a parallel in that really for the first time with the ukraine russia war did we see technology companies that are focused on the civilian market globally for the first time did we see them actually taking part and taking a strong position in a modern conflict and i think this is important because if you look at the two thousand ten s or so in silicon valley there was a lot of unease with being among employees at these companies and i think with executives too there was a lot of unease with their being pulled into you know the washington dc national security space and so i think the russia ukraine situation shows that these companies are now more willing to be national security actors and they're very aware that in our sort of dual use age where cyber technologies communications technologies have real military utility these companies seem to be willing to play ball in a way that they might not have been you know ten or fifteen years ago ago that said i think these two papers on china and taiwan show that the decision calculus for a lot of these companies is going to be much much more difficult regarding a future taiwan contingency just because their businesses are so entangled in this part of the world especially in the supply chain area that to support taiwan could open them up to coercion and the potential loss of their ability to make products in a way that would you know would make it much more difficult to throw their weight behind taiwan even if they think it is the right thing to do now we could see that shift if de risking really picks up and they continue to you know lessen their footprints in china right and there's outside of supply chains there's evidence that this is happening microsoft and amazon over the last few months have notified there or have announced i should say that they are shutting down ai research labs in china so there is a certain degree to which de risking is actually happening i would make one final point here which is that i think we should focus on de risking not decoupling because decoupling connotes a full break with china and that to me would lower the cost of eventually going to war and i think some ties between china and the states or corporate ties could be stabilizing going forward here lowers the cost.
Justin Sherman
For china to initiate conflict you mean.
Sam Bresnik
Or lowers the cost i think for both countries because they would have done the work to not have collateral damage to their business ecosystems as much so it would be easier for both i think to make this decision right right.
Justin Sherman
Yeah as you said these arguments are certainly out there but to clarify so do you expect that that these or other you know not covered in these papers us tech firms might shift or reduce their taiwan exposure in different ways in the next few years and are there particular tech security risks that you see greatly increasing or changing in the.
Sam Bresnik
Next few years i'm not sure i see the story really changing in the next few years something to watch right is is the degree to which the supply chains on taiwan are shifting right i think i mentioned a little before certain companies are requesting that their suppliers in taiwan move production out of taiwan right and when we generally think of de risking we think of companies moving out of china i would say there's also an interesting report out several months ago maybe over a year ago now from csis that polled taiwanese companies to get a sense of how they were approaching you know the us china conflict and their own you know potential business exposure from a conflict over the island and interestingly several taiwanese companies stated that they were looking to relocate at least some production at least some of their business outside the island so you know there could be this interesting story happening where we're already starting to see parts of this with the data centers being set up by you know microsoft and amazon and apple potentially you know working on a data center in taiwan as well we could see an expansion of the of the digital businesses so to speak in taiwan while we see supply chain shifts outside of the island into sort of more southeast asia and india but i think the idea that technology companies are going to preemptively sever themselves from taiwan i just don't really see that happening in the next couple years.
Justin Sherman
At least lastly and again for listeners your report is titled big tech in taiwan beyond semiconductors you talk about how these overall touch points may shape company decisions you just got at this a little bit but taking it from the other view the public sector side if you were advising the us government let's say the white house or any of the numerous executive agencies on this subject are there any recommendations you might make for them to better track or identify or potentially mitigate some of these risks to us technology in the near future.
Sam Bresnik
There are a few roles the government can play related to your question here first of all there's a role for the government to play in de risking there's a way in which they could help companies identify opportunities in various different countries there are ways to facilitate you know business to business dialogue so to speak between companies in different areas you know again i think it would be too much for the us government to demand decoupling i think the trump administration over the last couple weeks here has made it clear that they actually don't want to fully decouple from china which i think is actually largely a good thing but then there are other areas that we could look into one is discussing scenarios with these companies beforehand to get a sense of what companies might be willing to do in various situations because those kinds of conversations could inform military planning right the the the outset of the russia ukraine war was somewhat chaotic because you had a lot of companies that wanted to jump in and could provide a lot of very useful capabilities but there wasn't a lot of organization especially with the us government a lot of times these companies were going directly to the ukrainian government and saying hey we can do x y and z for you how do we get involved and so really setting the stage here for companies to be able to be more helpful before a conflict breaks out would be useful and very closely related to that is better use of government contracting right contracts can create less ambiguity about the roles companies could play in a conflict and create or help align incentives amid a conflict the nightmare scenario for taiwan is that in a conflict they would rely on a technology that that a company could then unilaterally decide to withdraw right and we saw this partially in russia ukraine right where there was reporting that elon musk didn't approve of a certain operation by the ukrainians and withdrew starlink access the taiwanese i will say are very reluctant to partner with starlink or to depend on starlink because of this issue and i think there's a way in which government contracting can clarify roles and decision making strategies structures in a way that would create more clarity for both the us and taiwanese governments in a conflict that's.
Justin Sherman
Very interesting and we can do a whole separate episode i'm sure on the starlink question set with taiwan but for now that is all the time we have so sam thanks again for joining.
Sam Bresnik
Us thanks so much for having me justin.
Justin Sherman
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Episode Information:
In this episode of The Lawfare Podcast, host Justin Sherman engages in a comprehensive discussion with Sam Bresnik, a research fellow at Georgetown University's CSET. The focus centers on Bresnik’s recent report titled “Big Tech in Taiwan: Beyond Semiconductors”, which examines the intricate relationships between major U.S. technology firms and Taiwan, especially in the context of potential geopolitical conflicts involving China.
[03:18] Sam Bresnik:
"I have a background in China studies… most of my work at CSET concentrates on how the Chinese government and the Chinese military are thinking about the national security applications of artificial intelligence and other emerging technologies."
Bresnik has been with CSET for over two and a half years, specializing in how China's advancements in AI and other technologies intersect with national security concerns. His current research delves into the role of big technology companies in the context of geopolitical conflicts, particularly focusing on Taiwan.
[04:03] Justin Sherman:
"The report is out from CSET at Georgetown, titled Big Tech in Taiwan: Beyond Semiconductors, and it looks at how seventeen leading U.S. tech companies are economically and operationally entangled with Taiwan."
The report builds upon a previous study that analyzed U.S. tech companies’ footprints in Russia and Ukraine. The Taiwan-focused study reveals that while these companies have significant ties to Taiwan, supporting Taiwan in a conflict scenario would pose greater challenges compared to their support for Ukraine during Russia's invasion.
[06:14] Sam Bresnik:
"Google was the company with the highest degree of FDI… about one point four billion dollars of FDI in Taiwan."
Despite substantial investments, FDI represents a small fraction of these companies' global expenditures. For instance, Google's $1.4 billion investment in Taiwan is just over 1% of its total FDI.
[14:16] Sam Bresnik:
"Taiwan has become an important hardware research and development base for companies like Apple and Google… Taiwan is a leader in advanced semiconductor production."
R&D activities in Taiwan are primarily focused on hardware due to the island's pivotal role in the global electronics supply chain. Companies like Apple and Google are expanding their data center presence in Taiwan, highlighting its growing significance beyond just semiconductors.
[17:10] Sam Bresnik:
"Supply chains seem to be the number one pain point for these companies… it's going to be very difficult to completely remove the risk to these companies from a Taiwan-China contingency."
The report emphasizes that Taiwan is central to the global electronic supply chain. A conflict involving Taiwan could severely disrupt the manufacturing and production capabilities of these tech giants.
[26:02] Sam Bresnik:
"Google has the biggest Taiwan-based workforce… thousands of employees from over thirty countries in Taiwan."
Google leads in workforce presence, with diverse employees from numerous countries. Other companies have varying levels of technical and service-oriented staff, reflecting their specific operational needs in Taiwan.
[17:10] Sam Bresnik:
"These companies from both China and Taiwan play such an important role in electronics manufacturing… a conflict could potentially imperil production of electronics on Taiwan."
The intertwined supply chains between China and Taiwan mean that any geopolitical instability could disrupt global technology production, affecting millions of consumers and numerous industries.
[07:51] Sam Bresnik:
"The decision to support Taiwan could expose companies to Chinese coercion and retaliation, making it harder to continue operations."
Supporting Taiwan in a conflict could lead to direct consequences from China, including pressure tactics and economic retaliation against the tech firms involved.
While the report primarily focuses on broader supply chain issues, it acknowledges the critical importance of Taiwan's advanced semiconductors. Losing access to these would have profound implications for global technology infrastructure.
[04:41] Sam Bresnik:
"It is going to be much more difficult for U.S. technology companies to support Taiwan than it was for them to support Ukraine for a variety of reasons."
During Russia's invasion of Ukraine, U.S. tech companies like Starlink and Palantir provided substantial support with technologies that aided Ukraine's defense efforts. However, replicating this level of support for Taiwan is more complex due to the deeper economic and operational ties these companies have with China and Taiwan.
[34:22] Sam Bresnik:
"For the first time with the Ukraine-Russia war, we saw technology companies… taking a strong position in a modern conflict."
The Ukraine conflict marked a turning point where civilian-focused tech companies became active national security players. However, the unique economic entanglements with China make a similar response for Taiwan more challenging.
[31:35] Sam Bresnik:
"These companies think they can make money in Taiwan… the risks are not existential for them, and could lead to solid profits growth."
Despite geopolitical tensions, U.S. tech firms continue to invest in Taiwan due to its advanced technological landscape and the economic benefits it offers. The potential for growth and innovation often outweighs the perceived security risks.
[33:34] Sam Bresnik:
"Given that the risks are not existential and war is not imminent, it makes business sense for them to expand in Taiwan."
Companies perceive Taiwan as a stable and technologically advanced market, making it an attractive location for investment and expansion.
[19:29] Sam Bresnik:
"De-risking isn't just as easy as plopping a new factory outside of China or Taiwan… it’s going to take years and investments to move the supply ecosystems into other places."
Efforts to diversify supply chains away from China and Taiwan face significant hurdles. While companies are moving some operations to Southeast Asia and India, the deep-rooted infrastructure and expertise in China and Taiwan make complete diversification a lengthy and complex process.
[40:04] Sam Bresnik:
"The government can help companies identify opportunities in different countries and facilitate business-to-business dialogues."
Bresnik suggests that the U.S. government has a role in aiding tech companies to de-risk their supply chains by exploring new markets and fostering international collaborations.
[40:04] Sam Bresnik:
"The government can help in de-risking by identifying opportunities, facilitating business dialogues, and better utilizing government contracts to align incentives."
To mitigate the risks associated with Taiwan, Bresnik recommends that the U.S. government:
[39:26] Sam Bresnik:
"Technology companies are not likely to preemptively sever ties with Taiwan in the next couple of years, but we might see shifts in supply chains."
While significant immediate changes are unlikely, the geopolitical landscape may gradually influence how U.S. tech firms manage their operations in Taiwan. Continued efforts to de-risk supply chains and diversify manufacturing bases are expected, albeit over an extended timeframe.
[37:46] Sam Bresnik:
"The story is not going to change much in the next few years… companies are working to de-risk, but full decoupling is unlikely."
Bresnik emphasizes that while there are ongoing efforts to reduce dependency on Taiwan and China, complete disentanglement is not anticipated in the near future. The interdependent nature of global technology supply chains necessitates a balanced approach to managing geopolitical risks without disrupting economic growth.
This episode of The Lawfare Podcast provides an in-depth analysis of the complex relationship between U.S. big tech companies and Taiwan. Through Sam Bresnik's expert insights, listeners gain a nuanced understanding of the geopolitical, economic, and security challenges that these tech giants face in navigating their operations amidst rising tensions between China and Taiwan. The discussion underscores the importance of strategic planning, governmental support, and international cooperation in mitigating risks while fostering technological innovation and economic stability.