Geopolitics Matter — Even to the Magnificent Seven
Taiwan’s election highlights the vulnerability of both the US and China to the cutting-edge chips made by TSMC.
The balance of power may come down to the need for cutting-edge chips.
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Taiwan goes to the polls Saturday. If the winner is Lai Ching-te from the pro-sovereignty Democratic Progressive Party, there will be some kind of response from mainland China. Put aside for now the nightmare scenarios (covered in yesterday’s Points of Return) that this turns into a military conflict between the US and China. Neither country wants that. But what could very easily happen might hit the Magnificent Seven tech stocks, which have come to be regarded as bulletproof and risk-free. They’re in an extremely strong competitive position, but that doesn’t protect them from the possible consequences of the Taiwan election.