Shipping and chokepoints
Semiconductor supply chain risk and a Taiwan blockade
Taiwan holds about 63% of global chip capacity at 7 nm and below. How a blockade or quarantine would hit chips, which sectors are exposed and how likely it is.
Guide
Shipping and chokepointsLast updated
3 minute read
By Zed Three analysts
Short answer
The semiconductor supply chain depends heavily on Taiwan, which held about 63% of global manufacturing capacity at 7 nm and below in 2025. A blockade or quarantine would cut off most advanced chips within weeks, making it the largest geopolitical risk in electronics supply chains.
Last updated
Where the concentration sits
Taiwan's overall share of chip manufacturing capacity is far lower, about 17%, but its lead in the most advanced nodes is what matters for AI servers, smartphones, cars and defense systems. Many of those chips have no qualified second source.
How a disruption could unfold
A full blockade is the extreme case. More plausible scenarios include large military drills that close sea and air zones for days, customs style inspections of ships heading to Taiwan, or pressure on energy imports, since Taiwan imports most of its fuel. Each would delay shipments and raise insurance costs before any shooting.
What buyers can do
Map which of your parts depend on Taiwanese fabs at the die level, not just the supplier's address. Agree buffer stock for single source parts, qualify alternatives where they exist and know which contracts let you reallocate supply.
What happens next?
We assess it is highly unlikely that a blockade of Taiwan begins within 3 months.
We assess it is likely that China holds at least one large scale military exercise around Taiwan within 6 months.
Likelihood ranges are Zed Three editorial judgments as of Nov 2, 2026, not advice.
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Frequently asked questions
How much of the world's advanced chips are made in Taiwan?
About 63% of global capacity at 7 nm and below in 2025.
Could China blockade Taiwan?
It has the capability to attempt one, but we assess it is highly unlikely (under 5%) within 3 months. Drills and gray zone pressure are far more likely.
Which industries are most exposed?
Data center and AI hardware, smartphones, automotive electronics and defense, because they rely on leading edge chips with few alternative suppliers.
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