▶ Full Post Text
I keep seeing posts about this, but it feels like the conversations keep missing the point. The biggest issue here is the supply chain risk, and nobody seems to mention it. I have yet to see a post talking about the implications of a full scale invasion of our Taiwan, which would in turn destroy the global tech industry overnight.
Some people here know supply chains well. For everyone else, think back to COVID. Now imagine that the shortages weren’t toilet paper or hand sanitizer, but technology. Our overall market cap in the US is 77T (Trillion). Technology makes up 30% of that, or 23T of the total. The technology sector alone brings in 10-12% of the total GDP to the United States. And I can only speak for the US, I have no guage on tech GDP numbers of other countries.
If you follow geopolitics closely, it’s not crazy to think China could make a move on Taiwan within the next year, yes it's very out there and the 2027 date has been thrown around a lot which is a bit missleading since nobody knows when it could actually happen. This is a very pseudo market post... Bear with me here and please put your think hats on so you could comprehend the implications of such an event if it were to ever take place.
Nobody knows when China will invade their neighbor, but if it does happen, it'll most likely start off as naval blockade that stops all exports out of Taiwan, including chips that power our lives, and that kind of disruption would be enough to send global markets into absolute turmoil.
I know some of you will say this could never happen, but for that are on the same page, I urge you to look into Chinese military expansionism and how much they've been doing to set themselves up for globalism within the last few years. For those that are ignorant or have no idea as to whats going on, here's a few bit's those which are TLDR. Please think on it if you have the capacity to do so:
\-Russia's president Putin wrote an article "The Historical Unity of Russians and Ukrainians". You can read it for yourself if you search the title, he explains the why and how and lays out a plan for Russian reunification. He's currently attempting to invade Ukraine and hundreds of men and women are paying the price each day.
\-China passes the Anti-Session law in 2005. This gives China the legal framework that gives them the authority to use non peaceful means to conquer Taiwan. A land that they view is theirs by right.
So even as a big “what if,” how would you position yourself in the markets if you had knowledge of this even happening ahead of time? Would you look at leap put options on the biggest fabless tech companies? Fabless means --- companies that design and outsource manufacturing to companies like TSMC (HQ in Taiwan). TSMC has manufacturing plants decades ahead of what any competitor has. Think of fabless companies such as Nvidia, AMD, Apple, Qualcomm, Broadcom, Realtek, etc. They send their designs to TSMC and other Taiwanese manufacturers to build their innovative chipset designs. These chips power AI, servers, android/ios phones, your computers, satellites, your EV's, etc. If there was ever a halt in production from Taiwan, and sanctions were placed against China, the global economy would crumble, there's no denying that.
This isn’t theory. It’s a real risk that deserves serious thought and discussion. Our entire tech sector could face systemic risk because of a singular event.
How you would you position yourself in the market if this were to happen? How would you hedge against it? I want to hear some genuine thoughts from those that have considered this and have done the research to understand it's a possibility.