Taiwan Becomes Central Pillar of America's AI Economy, Shifting from Security Problem to Strategic Asset

Taiwan has transformed from a regional security concern into a critical pillar of the American technology economy, driven by artificial intelligence, semiconductor dominance, and strategic decoupling from China. In the first five months of 2026, Taiwan exported $116.1 billion to the US, surpassing exports to China ($105.5 billion). TSMC, now the world's sixth most valuable firm with a $2 trillion market cap, is central to this shift, with its Arizona investment reaching $265 billion. Taiwan's economy grew 14.6% in Q1 2026, and its outbound investment to China has fallen from over 80% to below 1% in 15 years. However, Taiwan faces vulnerabilities including energy and water pressures, an aging society, and delays in US arms deliveries with a $30 billion backlog. The article argues that Taiwan's indispensability to AI supply chains means any crisis around the island would have immediate global economic consequences, while also potentially diverting US attention from Europe.