The TSMC thing is true, but it's more of a problem for the rest of the world than the US (and thus, the US's stance isn't really just about technology and chips as many like to frame it).
Most of the global semiconductor revenue still comes from US/Europe/Japan/South Korea, even though more chip volume comes from Taiwan. That is to say, the higher end, higher tech, higher dollar chips still come from non-Taiwan (and non-China) nations. Even though TSMC recently has had a more advanced manufacturing capability, other countries/companies (intel/samsung in particular but others too) have closed that gap dramatically in just the last couple of years. They've closed it enough that this gap isn't a big concern at the moment (and the lead could be regained as well in the next couple of years). Something that is massively overlooked is the fact that the leader in all of the silicon processing machines is European, the next up in silicon processing machine develop are all American companies. Without those companies, the lead TSMC has enjoyed is not possible. If China takes Taiwan, that pipeline of advanced machinery is gone for China.
If China took over Taiwan, it would not automatically mean they would assume all of that TSMC volume. Those advanced TSMC factories would effectively die. Three reasons: 1. Lack of access to advance silicon processing machines, 2. It's becoming clear that doing business with tyrant nations is in the long term, not good (orders will not be renewed). 3. the Chinese do not know how to run and maintain advanced fabs, but more importantly, they do not have the culture to develop and maintain world leading fabs. Contrary to popular belief, China's semi-conductor industry has struggled hard to catch up to the west (and Japan/Korea). Sure they quickly caught up say 90%, but that last 10% is always the hardest and most important/significant. It's not clear if they could ever really close that last 10% (or whatever the number is). Main reason being, they simply aren't innovative enough. They are good at copying and catching up, but to take the global lead, that's not good enough. They do not have the culture for it. We're talking about a culture that has people disinfecting airport run ways
. It's a culture, where a low level manager does not have the autonomy to say "Hey, that's stupid, stop disinfecting an airport tarmac" for fear of punishment from above. This sort of culture simply doesn't produce high tech. This culture is permeated even in Chinese private business (I see it first hand where I have to wait 2 weeks for low level people to get approval from above for the simplest, and dumbest of things, working with anyone else on the planet, it takes a half day).
In short, China is actually VERY inefficient with it's money when it comes to tech investment. The only reason it's not apparent is that they just have so much fucking money, but once their economy slows, they will have a big problem. I don't think the Chinese culture will allow for them to figure out how to gain back efficiency per dollar investment in tech (that's my speculation).
Also, in terms of dollar and high tech chips, China is at the bottom. They basically produce the throw away low margin lower tech chips. The kind of chips that cost pennies or sometimes less than a penny to buy. Where as US/Korea/Japan/EU produce chips that literally cost $1000+ per chip (i.e. cutting edge, high tech stuff) that also enjoys the highest margins (which enables further research and development). TSMC, is somewhere in the middle of those two extremes (mid-tier chips that go into high end consumer electronics).
My source? I work in the semi-conductor industry. For the last 10 years I've heard "China will take the lead in semis within 2 years".... They simply can't figure it out.
Anyway, would be nice if this does come out of committee. Fuck the CCP. Xi can eat a dick.
My end thesis for China is that their top-down culture is their biggest weakness in the long term. From domestic affairs, to economic affairs, to geopolitical affairs. That is not to say we should not worry about them; we should certainly be ready for conflict with China, but China itself is it's own worst enemy in the long term. CCP is incapable of changing this culture because their power and legitimacy is completely predicated on this top-down structure. Couple that with the strong face saving culture and you end up with policies that are fucking ridiculous and inefficient (like disinfecting sidewalks and bushes, even though we know surface transmission of COVID is near 0... imagine doing stupid shit like this in tech...yes, they do it).