Apple CEO Tim Cook was among a handful of top tech executives who attended a classified CIA briefing warning that China could attack Taiwan by 2027, according to a sweeping investigative report by The New York Times ($).
The previously unreported briefing was apparently held in a secure room in Silicon Valley in July 2023. The meeting is said to have been arranged at the request of the then-commerce secretary Gina Raimondo, who had grown frustrated with the tech industry's reluctance to move chip production away from Taiwan.
CIA director William Burns and director of national intelligence Avril Haines reportedly presented the latest intelligence on China's military plans to Cook, Nvidia CEO Jensen Huang, AMD CEO Lisa Su, and Qualcomm CEO Cristiano Amon.
Cook reportedly told officials afterward that he slept "with one eye open."
A similar classified session was said to have been held at the White House in late 2021, but executives left skeptical because much of the intelligence had already been reported publicly. Earlier that same year, a senior U.S. military official had told Congress that the armed services believed President Xi Jinping of China wanted his army to be ready to take Taiwan by 2027. From the report:
Jake Sullivan, Mr. Biden's national security adviser, ranked the U.S. reliance on Taiwan for semiconductors as one of America's greatest vulnerabilities. He wanted the industry to recognize the risk and support construction of U.S. manufacturing plants. Mr. Biden also wanted to provide $50 billion in government subsidies to build semiconductor plants domestically [resulting in the CHIPS and Science Act of 2022].
"We were saying: 'This is crazy. We have to do something about it,'" Mr. Sullivan said in an interview.
The investigation reveals Silicon Valley's stubborn dependence on Taiwan Semiconductor Manufacturing Company (TSMC), which produces around 90 percent of the world's most advanced chips, including all of Apple's custom silicon for iPhone, iPad, and Mac.
A confidential 2022 report commissioned by the Semiconductor Industry Association and reviewed by NYT concluded that losing access to Taiwan's chip supply would trigger the worst economic crisis since the Great Depression, with U.S. GDP falling 11 percent. Another report by Bloomberg from January 2024 estimated a conflict would cost the global economy more than $10 trillion.
Despite the warnings, the NYT investigation found that companies including Apple were initially slow to commit to buying more expensive chips from U.S. factories. Chips made domestically cost more than 25 percent above those produced in Taiwan because of higher material, labor and permitting costs, and TSMC's Arizona plants currently run technology a generation behind what's available on the island.
Apple has since taken steps, however. Last summer, Cook visited the Oval Office and committed to investing $100 billion in the United States, with the money being used to support TSMC and other chip manufacturers. Apple has reportedly also begun holding all-day engineering meetings with Intel to evaluate its manufacturing capabilities.
TSMC has now committed to roughly $165 billion in U.S. investment, including land for at least five additional plants in Phoenix. The company's Arizona facility recently produced Nvidia's first U.S.-made AI chip, although the report notes that even those chips still need to be shipped back to Taiwan for advanced packaging.
Meanwhile, Taiwan's government maintains an unofficial policy requiring TSMC to keep its most advanced manufacturing technology on the island. This "silicon shield" is designed to make the country too economically important to attack – yet Russia's invasion of Ukraine has shown that economic self-interest does not necessarily prevent military aggression. TSMC's CFO said earlier this year that its most advanced processes will remain in Taiwan for the foreseeable future.
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