The Chip on Europe’s Shoulder

(And Why Nobody’s Doing Anything About It)

I spent a fair few years in uniform learning one unglamorous truth: the threat you can see coming is never the one that gets you. It’s the one everyone’s already agreed not to look at.

Which brings me, obliquely, to semiconductors.

A pilot survey landed this week from an unlikely coalition… Bertelsmann Stiftung, MERICS, Clingendael, FIIA… the kind of think tank alliance that sounds like a European supergroup nobody asked for. They polled 228 companies across the continent about economic security. The findings should have made headlines for a fortnight. Instead, they’ll be quietly filed under “concerning” and forgotten by Friday.

Here’s the number that stopped me mid-coffee: 81% of European firms say they took a real, tangible hit from the Ukraine invasion and the energy chaos that followed. Fair enough. Nobody’s pretending that didn’t happen. But when you ask how many of those same companies have done any actual scenario planning for a Taiwan contingency… stress tests, diversification, anything beyond a shrug and a prayer… the number falls off a cliff. Ten percent.

Let that sit. Eight in ten got burned once. One in ten bothered to check if the stove’s still hot.

The Bit Nobody Wants to Say Out Loud

Taiwan isn’t a footnote here. It makes over 60% of the world’s semiconductors and something like 90% of the genuinely advanced chips, the sub-7nm stuff that ends up in everything from your car’s parking sensors to the industrial kit running half of Europe’s factory floors. If the Strait closes, and there are people paid a great deal of money whose job is to think about exactly that, Bloomberg and Rhodium Group reckon you’re looking at a global hit somewhere between two and ten trillion dollars in year one. Not a recession. A different category of event entirely.

So why is only one in ten companies doing anything about it?

I don’t think it’s stupidity. I’ve sat in enough boardrooms, actual and metaphorical, to know that corporate inertia rarely comes from not understanding the risk. It comes from understanding it perfectly well and deciding, quietly, that dealing with it is somebody else’s problem.

Four Excuses, Dressed as Strategy

The report lays out the reasoning, and it’s worth translating out of think-tank into plain English.

“It’s too big to hedge.” Building a TSMC-grade foundry takes years and tens of billions. So the logic runs: if the whole system collapses, my little bit of preparation won’t matter anyway. Which is true, right up until it isn’t, and by then it’s a touch late to discover you were wrong.

“The risk is hypothetical, the cost isn’t.” Redesigning hardware and dual-sourcing parts costs real money now, for a disaster that might not happen. Classic short-termism, the corporate equivalent of not buying travel insurance because the flight probably won’t crash.

“Someone else will sort it.” A lot of firms are quietly banking on the EU riding to the rescue, deterrence holding, the Chips Act doing the heavy lifting. Outsourcing your risk management to geopolitics is a bold move. I wouldn’t call it a plan.

“It’s more complicated than ‘just Taiwan.'” This one I’ll grant is genuinely thorny. A Taiwan crisis doesn’t stay in Taiwan. It drags mainland China into the picture, sanctions cascade, and half of Europe’s biggest firms have supply chains or sales markets in China too deep to touch without gutting their own business model. De-risking here isn’t a spreadsheet exercise. It’s asking a company to willingly shrink itself.

That last one’s the only excuse with any real weight to it. The other three are just fear wearing a suit.

What I Actually Think Is Going On

Eighty one percent got hurt and didn’t learn the lesson that mattered. Not “the world is unpredictable,” which is what most crisis debriefs settle for because it’s comfortable and requires nothing further. The actual lesson was “the next shock is already visible, and we chose not to look at it because looking costs money now for a bill that might come due later, on someone else’s watch.”

That’s not risk management. That’s a company betting its shareholders’ future on the hope that the cavalry arrives before the invoice does.

I’ve lived off-grid long enough to know a thing or two about what happens when you don’t prepare for the thing you can already see coming. You don’t get a warning shot. You get a very quiet morning where the thing you needed simply isn’t there anymore, and no committee meeting is going to conjure it back.

Europe’s boardrooms would do well to remember that the cost of looking foolish for stress-testing a scenario that never happens is precisely nothing. The cost of not looking is measured in trillions, and it doesn’t send a save-the-date.

Until Next Time