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ASML & TSMC TAKE SERIOUS ACTION AND THE US FIELDS NEW ISLAND FIGHTERS

IN COMPETITION THIS WEEK

Summaries and Links to This Week’s Curated Strategy Articles

21 – 26 MAY 2024



 

EXECUTIVE SUMMARY

IN COMPETITION THIS WEEK (22 - 26 May 24), various strategic developments are discussed, highlighting geopolitical tensions and their global implications. In the Asian-Pacific, ASML and TSMC have prepared to disable advanced chip-making machines remotely if China invades Taiwan, addressing concerns about semiconductor industry risks amid rising Chinese aggression. The USA and China continue to face challenges in their bilateral talks on climate change and artificial intelligence, with deep-seated tech competition dominating their relationship. In Russia, Ukraine has intensified its military campaign in Crimea using U.S.-supplied missiles, aiming to disrupt Russian military capabilities, though the conflict's dynamics remain complex. These developments underscore the critical importance of strategic measures in mitigating disruptions and maintaining global stability in the face of geopolitical threats.

 

CHINA

 "ASML and TSMC Can Disable Chip Machines If China Invades Taiwan" by Diederik Baazil, Cagan Koc, and Jordan Robertson reveals that ASML Holding NV and Taiwan Semiconductor Manufacturing Co. (TSMC) have the capability to remotely disable advanced chip-making machines in the event of a Chinese invasion of Taiwan. This precautionary measure addresses concerns from U.S. officials about the potential risks to the global semiconductor industry posed by escalating Chinese aggression. ASML, the sole manufacturer of extreme ultraviolet (EUV) lithography machines essential for advanced chip production, reassured the Dutch government about this contingency plan during simulations of a possible invasion. This strategic safeguard underscores the high stakes of the global chip war, where around 90% of the world's most advanced semiconductors are produced in Taiwan. The central point of the article is the critical importance of protecting semiconductor production capabilities amid geopolitical tensions, highlighting how industry leaders and governments are preparing to mitigate potential disruptions in the face of increasing regional threats.

 

"How China Will Squeeze, Not Seize, Taiwan" by Isaac Kardon and Jennifer Kavanagh argues that China is more likely to gradually intensify its coercive actions against Taiwan rather than launch a full-scale invasion. This strategy, known as a "gray-zone campaign," involves incremental encroachments into Taiwan's airspace, maritime areas, and information domains, aiming to undermine Taiwan's autonomy without triggering a direct military conflict. The authors highlight that such tactics allow China to avoid the high risks and costs associated with an invasion while still achieving significant control over Taiwan. The central point is that the United States and Taiwan should focus on countering these gray-zone operations by enhancing Taiwan's surveillance, communication infrastructure, and defensive capabilities, rather than solely preparing for an outright invasion. This approach would better address the ongoing and nuanced threats posed by China's long-term strategy to subjugate Taiwan.

 

“Why a Small Pacific Island Territory Is Upending Nickel Prices. Violent riots in New Caledonia have an outsized global impact on critical mineral supply chains.”

The ongoing riots in New Caledonia, triggered by a controversial French constitutional amendment affecting the Indigenous Kanak people's voting rights, have caused significant disruptions beyond the island, including road blockages, airport closures, and increased nickel prices. The violence, resulting in six deaths and substantial property damage, prompted France to declare a state of emergency. New Caledonia's critical role in global nickel supply—accounting for 25% of the world's resources and 6% of production—underscores the territory's strategic importance, particularly for producing stainless steel and lithium-ion batteries essential for electric vehicles. This unrest, combined with China's dominance in the nickel market, highlights the geopolitical significance of New Caledonia in the global supply chain of critical minerals.

 

“Are U.S.-China Talks Accomplishing Anything? Meetings on climate and AI show some progress, but tech competition still dominates the relationship.” Recent bilateral meetings between China and the United States on climate change and artificial intelligence (AI) have highlighted both progress and persistent challenges in their relationship. The first meeting, held in Washington, focused on climate issues such as energy transition and decarbonization, continuing a long-standing area of cooperation. This dialogue is set to continue with another meeting in California. In contrast, the second meeting in Geneva addressed the nascent field of AI, aiming to mitigate global risks associated with advanced AI systems. However, the cooperation on AI remains tentative due to the centrality of technology competition in U.S.-China relations.

 

Despite these efforts at collaboration, the overarching theme of the meetings underscores the deep-seated rivalry between the two nations, particularly in the tech sector. The U.S. administration has maintained a firm stance on protecting its technological interests, as evidenced by recent tariffs on Chinese products. At the same time, China seeks to establish itself as a key player in the global governance of AI. These actions reflect a broader strategic competition, with both countries striving to advance their technological capabilities and influence the rules governing these innovations. The fundamental lack of trust and differing strategic goals complicate meaningful progress in these critical areas of global cooperation.

 

RUSSIA

 

Ukraine Hits Russian Complex in Occupied Crimea With U.S.-Supplied Missiles Strike late Thursday was latest in mounting campaign against Russian air-defense systems, warplanes and other military infrastructure.”  Ukraine has launched a series of strikes on Russian military infrastructure in Crimea using U.S.-supplied long-range missiles, including the Army Tactical Missile System (ATACMS). The most recent strike targeted a Russian air defense communications center in Alushta, causing several explosions. These attacks are part of Ukraine's broader strategy to disrupt Russian military capabilities in the region, focusing on high-value targets such as air defense systems, jet fighters, and warships. Previous strikes in April and last week have already resulted in significant damage to Russian airfields and aircraft.

 

The strikes come as Ukraine continues to face intense fighting on its northern and eastern fronts, and these deep strikes into Crimea aim to undermine Russia's hold on the peninsula. The use of ATACMS has allowed Ukraine to target key military facilities that are difficult to camouflage, making Crimea a particularly vulnerable target. The ongoing conflict has also led to debates within the U.S. about lifting restrictions on Ukraine's use of American weapons to strike Russian territory, which some analysts believe could significantly alter the dynamics on the battlefield. Despite these efforts, there is a cautious acknowledgment that while these strikes may cause discomfort, they are unlikely to cut Crimea off Russian support completely.

 

USA

 The U.S. Marine Corps is actively preparing for potential conflict with China by conducting military exercises on islands in the Philippines, less than 100 miles from Taiwan. These exercises involve the 3rd Marine Littoral Regiment, a unit specifically created to operate in island and coastal environments, reflecting a strategic shift to counter China's military capabilities in the region. The training focuses on rapid deployment, establishing positions, and maintaining mobility to avoid detection by Chinese sensors and missiles. The Marines aim to complicate China's military decision-making and provide real-time intelligence and targeting data to support broader U.S. military operations. This strategy is part of a larger effort to strengthen U.S. alliances in the Indo-Pacific and ensure readiness for potential conflicts near Taiwan.

 

"The U.S. Navy Can’t Build Ships" by Gil Barndollar and Matthew C. Mai, the authors highlight the significant challenges facing the U.S. Navy due to decades of deindustrialization and poor strategic planning. Despite recognizing China as a primary adversary, the U.S. has been unable to maintain its shipbuilding capabilities, leading to a shrinking fleet and a failure to keep pace with China's rapid naval expansion. Budget constraints, workforce shortages, and supply chain issues have compounded the problem, forcing the Navy to decommission more ships than it can build. As the U.S. struggles to bolster its naval power, it risks losing its strategic edge in the Pacific, raising concerns about its ability to deter conflicts and maintain global maritime dominance.

 

“The U.S. assembles the pieces of a possible Gaza war endgame" by David Ignatius, the author discusses the emerging outlines of a potential resolution to the ongoing conflict in Gaza. Following extensive discussions between U.S. officials and leaders in Saudi Arabia and Israel, the proposed endgame involves a gradual cessation of Israeli military operations and the establishment of a Palestinian governance structure supported by moderate Arab states. Key elements include the containment of the conflict to avoid regional escalation, ongoing dialogues with Iran to limit nuclear enrichment and cease support for militias, and a final Israeli assault on Hamas's remaining military capacities in Gaza. The U.S. is also working towards a security agreement with Saudi Arabia that includes the normalization of relations with Israel, contingent on progress towards a two-state solution.

 

Ignatius emphasizes that while the framework for peace is becoming clearer, significant obstacles remain, including the recent decision by the International Criminal Court to seek arrest warrants for Israeli and Hamas leaders, which complicates diplomatic efforts. The envisioned endgame includes a phased withdrawal of Israeli forces and the establishment of a governing council in Gaza, integrating elements of the Palestinian Authority with backing from Egypt, Jordan, the UAE, and Saudi Arabia. Although these plans are still tentative and face political resistance, they represent a concerted effort by the Biden administration to piece together a viable path to peace in the region, even as the dynamics on the ground continue to evolve.

 

"U.S. Intelligence Is Facing a Crisis of Legitimacy" by David V. Gioe, Michael S. Goodman, and Michael V. Hayden, the authors discuss the growing distrust in the U.S. intelligence community, which poses significant risks to national security. They argue that the effectiveness of intelligence operations, crucial for preempting threats like the Russian invasion of Ukraine and terrorist activities, is being undermined by widespread public skepticism and political attacks from both the left and right. Polls reveal that many Americans are concerned about the intelligence community's political interference and doubt its role in national security. This erosion of trust has led to contentious debates over surveillance laws, such as the reauthorization of Section 702 of the Foreign Intelligence Surveillance Act, which faced opposition and was only extended for two years instead of the usual five.

 

The authors highlight that this crisis is exacerbated by historical missteps and high-profile incidents like the NSA leaks by Edward Snowden, which have fueled misconceptions about the intelligence community's operations. Despite reforms and increased transparency efforts, the intelligence community struggles with overclassification and a failure to communicate its value and oversight mechanisms to the public effectively. The diminishing trust in intelligence agencies could lead to inadequate resources and authority, hampering their ability to protect the nation. The authors emphasize the need for a balanced approach that ensures both security and civil liberties to restore confidence in the intelligence community, warning that failure to do so could have dire consequences for U.S. and global security.

 

"A New Centrism Is Rising in Washington" by David Leonhardt, the author examines the emergence of a new bipartisan centrism in American politics, which has facilitated significant legislative accomplishments despite the country’s deep polarization. Over the past four years, Democrats and Republicans have cooperated on various major issues, passing laws on infrastructure, semiconductor production, veterans’ health, and more. This new centrism, described as neopopulism, diverges from the neoliberal consensus that dominated post-Cold War Washington, focusing instead on ambitious economic policies and a skepticism of free trade, reflecting a shift towards addressing the economic and geopolitical challenges posed by China and other global rivals.

 

Leonhardt argues that this shift towards neopopulism is driven by the failure of neoliberal policies to deliver broad-based prosperity and the recognition of new economic realities. Both parties have increasingly adopted policies that resonate with public sentiment, such as industrial policy and trade protectionism. This bipartisan approach has led to unexpected cooperation, such as Democrats helping to save a Republican Speaker of the House and Republicans supporting measures typically associated with Democratic agendas. Despite lingering ideological divides, this new centrism signals a pragmatic response to the needs and opinions of the American electorate, suggesting a potential pathway for future governance in a highly polarized political landscape.

 

 










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