It may simply be a question of timing, media attention, and the direct involvement of the #2 person in the line of POTUS succession,  but the arrival today of a House Speaker Pelosi-led U.S. delegation in Taiwan is stirring global controversy and geopolitical tensions.  The reality is there are always regular and frequent visits by U.S. officials to Taiwan in what is an open, transparent, and healthy regional alliance between the U.S. and the island country (home to the semiconductor manufacturing behemoth Taiwan Semiconductor Manufacturing Company Limited [TSMC]).

But perception and the media cycle do matter in our current information ecosystem. We thought the best version of OODA Loop ‘coverage’ of the trip by Pelosi et. al. is to return to our Fall 2021 Stratigame. The objective here is a “cheat sheet” of questions the OODA Loop readership should bring to bear in their analysis of the impact of the visit – a list of alternative, more sophisticated framing of the issues at hand.  Our analysis is neither prescriptive nor predictive but offers a framing of the issues which achieves better and more informed questions and insights about the impact of this geopolitical maelstrom.

OODA Stratigame:  Taiwan Futures

In our Results of an OODA Stratigame:  Scenario Planning for Global Computer Chip Supply Chain Disruption,  the future of Taiwan was fully integrated into the scenario narrative.  Potential futures included:

1. Rapid action by the U.S. and other open societies to reduce dependence on Chinese chip assembly/manufacturing and to build new capabilities in locations other than Taiwan has enabled a stronger supply of computer chips. And the US and other open societies see economic, military, and diplomatic strength. A strong chip supply enables continued tech-based innovation in multiple sectors of the economy and contributes to national and economic security – especially in areas such as cybersecurity (i.e., IT global supply chain trust, integrity, authenticity, and transparency). OODA network members underscored in discussions of this scenario that innovation in a world of peace and stability is often very incremental.
2. In another future, there is the same rapid action by the US and other open societies to reduce dependence on Chinese chip assembly/manufacturing and to build new capabilities in locations other than Taiwan, but tensions with China remain high.  Even though this scenario posits a stable supply chain, companies will be concerned about the ability of geopolitical tension to change that in short order. Innovation is focused on solving immediate problems–with a priority on returning the U.S. domestic supply chain dynamics and consumer culture to pre-pandemic modes of operation.

A seminal industry study identified the market forces, crises, and incentives that outsourced chip manufacturing in the first place (in the 1980s) during the period of Japanese competitive advantage and again in other parts of Asia in the 2000s (in hindsight, the shift to Taiwanese foundries has clearly proven radical and highly impactful). In each period, foreign countries were willing to subsidize the cost of new fabs, allowing for indigenous companies to grab market share.

Questions remain about these futures:

• Do these scenarios argue for a clear commitment to large-scale domestic production in the U.S. and the building of fabs subsidized by the government as a clear strategic priority?
• If so, is building such fabs in the U.S. possible in the timeframe depicted in these scenarios?
• Is the U.S. semiconductor industry structured into a collaborative ecosystem to effectively enable this national effort?
• In the end, does the upcoming passage into law of the Chips and Science Act of 2022 qualify as “rapid action”?

Even with this legislation and subsequent subsidy stateside, “Intel’s fabs will take ~2 years to build, and experts believe it will take 3-5 years to gauge whether the strategy will work.”  Taiwan-based TSMC is an outlier, and its margins are boosted by government subsidies that are much higher than the US’s. Experts are still optimistic: The US needs computer chips, and global supply chain issues are proving it pays to have them domestically.” (1)

During the OODA Stratigame, we were also sensitive to the “workplace hazard” of too China/Taiwan-centric a Stratigame, reminding participants that too strong a political narrative about the “China Threat”  would take too many strategic resources away from other threat vectors.  As a result, we gamed out a scenario in which:

• National security tensions increase to include significantly enhanced great power competition between the U.S. and China/Russia.
• Although years of planning may have shifted a small amount of production to the U.S. and other nations, the lead time required to build fabs based on truly innovative chip architectures means that production does not come close to meeting demand.
• A U.S. domestic political system remains fraught with instability and growing violence is likely in this scenario.
• Innovation in this scenario does not get momentum or evolve substantially in the high technology sector – but provides evolutionary and disruptive trends in other industry verticals.
• It can be expected that the chip supply chain disruption is coupled with an overall traditional supply chain crisis.
• Supply chain and ransomware cybersecurity risks are not only prevalent but pandemic-level in their spread and frequency worldwide– and not even remotely contained. Fraud and cybercrime are still a threat and uncontained China, Iran, and Russia exploit every cybersecurity vulnerability along the supply chain.
• The inability to replace key equipment impacts overall cyber resiliency.

The reality is that the timing and signaling of the U.S. delegation’s visit to Taiwan are actually in response to the severity of Putin’s recent actions in Ukraine.  It seems the current American leadership has concluded that the highest level of engagement is required to avoid the mistakes of the past relative to the Russian threat to Ukraine and Beijing using the Putin template sooner rather than later in a tactical decision to attempt to annex Taiwan. Some have always considered it a “not if, but when” proposition.  Scenario planning is not concerned with nailing down a prediction on the date for such activity by China but is more concerned with articulating a narrative that captures the potential precursor conditions for Beijing to act.

What Next?  Questions about The Pelosi Delegation Visit to Taiwan

The overarching strategy question here is: How do formative answers to these questions feed back into your organization’s foresight strategy, scenario planning, wargaming, strategic planning, risk awareness, and decision-making?

Here are the questions we are asking to sort through the sometimes reductive mainstream news outlet coverage and to inform our tracking of more sophisticated feedback loops from the event:

1. Overall, have Putin, Russia, and Ukraine acted as an accelerant for Beijing to attempt to annex Taiwan?
2. Is the Pelosi delegation trip designed to let out some steam from this geopolitical threat vector?
3. Or is the visit a real politique show of strength (and strategic priority signaling and messaging) for the future of the U.S./Taiwan partnership?
4. Put another way: is the Pelosi delegation fighting off the tiger with whip and chair?  Or are they poking the bear? Or, based on Russia’s strain in Ukraine and China’s mortgage crisis (and Xi’s short-term concerns for maintaining power) are Russia and China, in reality, wounded animals strategically?
5. Cyber activities around Ukraine were surprising and not what was strategically expected (in terms of volume and high profile targets)  Still vital offensive and defensive incidents did occur.  What is the cyber activity surrounding this diplomatic visit?
6. How is the U.S. visit to Taiwan going to be packaged for domestic Chinese propaganda information ecosystem consumption?
7. What is the uptake of the event for a domestic Russian audience? In Ukraine? In Europe? The rest of Asia?
8. Has the visit been put into the domestic U.S. political meat grinder, netting facile narratives at both extremes of the political spectrum which have nothing to do with any of the insights and framing offered above?  If so, what are the domestic implications?
9. What role disinformation?
10. Non-state cyber actors played a unique, historically unprecedented role in the ongoing conflict in Ukraine.  In Taiwan, it seems the corporation is signaling and messaging as if sitting at the table as a non-state actor during these tensions.  Or as TSMC’s Chairman Mark Liu shared with CNN recently:   “Nobody can control TSMC by force.”  What other stakeholders are chiming in directly or indirectly? Are these activities consistent with international norms?  Have major players in the U.S. semiconductor subsector followed suit behind TSMC’s Liu with direct media campaigns on the issues at hand?

Further Resources

OODA Loop – Scenario Planning for Global Computer Chip Supply Chain Disruption: Results of an OODA Stratigame

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