Beijing should seize Apple's iPhone chipmaker in Taiwan if US sanctions China, top Chinese economist says

• US-China tensions have run high over Taiwan following Russia's invasion of Ukraine.
• A leading economist urged Beijing to seize chipmaker TSMC if the West hits China with sanctions.

A top Chinese economist said that if the US imposes crippling sanctions on China, Beijing must retaliate by seizing Apple's iPhone chip supplier in Taiwan.

"Should the US and the West impose devastating sanctions on China just like how they did to Russia, we must reclaim Taiwan," Chen Wenling, chief economist at the China Center for International Economic Exchanges (CCIEE), said during an online forum discussing US-China relations on May 30. The CCIEE is managed by China's National Development and Reform Commission, a state agency that oversees China's economic development.

"Especially when we're talking about production and supply chains, we must seize corporations that rightfully belong to China, such as TSMC," Chen added, referring to Taiwan Semiconductor Manufacturing Company, the chip manufacturer that Apple relies on for its iPhones. TSMC is expected to make $17 billion in revenue this year from Apple alone, according to MacRumors.

"TSMC is speeding up its transfer to the US with six factories planned in America. We must not allow it to achieve its aim," she said.

In May last year, Reuters reported that TSMC was looking to build as many as six plants in the US. TSMC's spokesperson confirmed to Insider that "Phase One" of its US-based production plan was in motion.

Chen did not elaborate on why or when she thought the US would sanction China. However, in mentioning Russia's invasion of Ukraine, she was likely echoing how Asian governments were now more sensitive to potential conflicts in the region because of Russia's war.

China has long viewed self-governing Taiwan as part of its territory, and Beijing often puts on displays of military might to flex its strength in the region. Taiwan has consistently rejected China's claims and maintains its independence.

Tensions between the US and China escalated last month after President Biden said that the US would respond militarily if China invaded Taiwan. An unnamed White House official later said Biden's statements were in line with existing US policies on China.

"Defense establishments suddenly thought geopolitical calamities previously thought highly unlikely were suddenly possible, with Taiwan merely being the most obvious potential flashpoint in a region riven with potential tensions," James Crabtree, the executive director of the International Institute for Strategic Studies, told Politico on Tuesday.

China wants to buffer its economy from trade disputes with the US

Chen's comments also highlight how vital Taiwan's chipmaking technology is to China. TSMC alone accounts for more than half of the world's market share in chipmaking, according to Morningstar.

Tensions between the US and China simmered under the Trump administration and impacted the chipmaking sector. In late 2020, the US sanctioned China's largest chipmaker, SMIC, citing fears that any component exports to SMIC might be intercepted and end up in the hands of the Chinese military.

China sought to overcome these disputes by building homegrown capabilities in strategically-important technologies. Earlier this year, Beijing announced that it would nurture thousands of companies involved in sectors such as semiconductor manufacturing. The plan is part of China's "comprehensive strategy to build production chains threatened by the possibility of US-China decoupling," Barry Naughton, a professor and China expert at the University of California, San Diego, told Insider in January.