Beijing's Taiwan Gambit: What the Trump-Xi Summit Means for Europe's Chip Supply

In Brief

• Summit stakes: President Xi Jinping will press President Trump on Taiwan during their May 14-15 Beijing meeting, with an $11 billion US arms sale to Taiwan as the central friction point.
• Semiconductor exposure: Taiwan Semiconductor Manufacturing Company (TSMC) produces approximately 90% of the world's advanced chips, making any Taiwan Strait instability a direct threat to European AI infrastructure.
• Strategic ambiguity fraying: The Trump administration's contradictory signals on Taiwan create conditions where miscalculation becomes more likely, not less.
• European blind spot: Brussels has no meaningful contingency framework for a Taiwan crisis, despite the continent's near-total dependence on Taiwanese advanced semiconductors.

The geopolitical dynamics shaping AI's future will be front and center at Human x AI Europe on May 19 in Vienna. For those tracking how policy, technology, and power intersect, this is a conversation worth joining.

The $11 billion figure appears in a December 2025 notification to Congress. It represents the largest US arms package ever offered to Taiwan: advanced missiles, drones, and air defense systems. According to Bruegel, President Trump acknowledged in February 2026 that he had consulted with Xi Jinping about these sales and decided to wait until after the summit to proceed. That pause is not a diplomatic courtesy. It is a concession made before negotiations have formally begun.

When Donald Trump arrives in Beijing on May 14, he will carry less leverage than any US president visiting China in recent memory. The Iran conflict has stretched American military assets thin. European allies have declined to provide support. The Supreme Court has blocked key tariff measures. Xi Jinping, by contrast, faces no elections, no free press, and no domestic political cost for patience.

The question for European policymakers, technologists, and investors is not whether Taiwan will be discussed. It will. The question is what happens to the global semiconductor supply chain if the conversation goes badly.

The Chip Chokepoint

Taiwan Semiconductor Manufacturing Company produces roughly 90% of the world's most advanced semiconductors. These chips power AI data centers, next-generation weapons systems, and the digital infrastructure that European democracies increasingly depend upon. As Bruegel's analysis notes, a crisis in the Taiwan Strait, or even a credible threat of one, would have a comparable or greater impact on the global economy than the current virtual closure of the Strait of Hormuz.

Europe's exposure here is structural, not incidental. The EU's Chips Act aims to increase domestic semiconductor production to 20% of global output by 2030, but advanced logic chips remain almost entirely sourced from Taiwan. No European fab currently produces at the 3nm or 5nm nodes that define cutting-edge AI hardware. Intel's planned facilities in Germany and TSMC's Arizona expansion offer medium-term diversification, but neither addresses the immediate vulnerability.

A Taiwan contingency would not merely disrupt supply chains. It would halt them. European AI deployment timelines, from public sector automation to defense applications, assume continued access to Taiwanese silicon. That assumption deserves scrutiny.

Strategic Ambiguity Becomes Strategic Confusion

The Trump administration's Taiwan policy has become difficult to parse, even for specialists. The Center for American Progress describes the current posture as "strategic instability": a condition where friends fear abandonment while adversaries may conclude they can act with impunity.

Consider the contradictions. The administration authorized the largest arms sale in the history of the US-Taiwan relationship. Days later, China launched "Justice Mission 2025," its most extensive military exercises to date, encircling the island with naval forces. The State Department issued formulaic criticism. The exercises achieved their objective.

Meanwhile, Trump has framed the relationship in transactional terms, describing US security commitments as an insurance policy Taiwan has failed to pay. When asked whether Xi might attempt a strike on Taiwan's leadership, Trump responded: "He considers it to be a part of China, and that's up to him, what he's going to be doing."

This is not strategic ambiguity. Strategic ambiguity, as originally conceived, served a dual deterrent function: discouraging Beijing from using force while discouraging Taipei from declaring independence. The current posture achieves neither. It creates uncertainty without deterrence.

What Beijing Wants

According to analysts at The Asia Group, Beijing's minimum ask is procedural respect: no new arms approvals announced around the visit, no Taiwan-affirming language in any joint statement, and ideally a reaffirmation of the "One China" policy. A freeze on pending arms sales would register as meaningful in Beijing's calculus.

The maximum ask is more ambitious. Han Shen Lin, China managing director for The Asia Group, told The Straits Times that "convincing Mr Trump to declare he 'opposes Taiwan independence' would be a home run."

Matt Turpin, former director for China at the National Security Council during Trump's first term, acknowledged the possibility: "It's certainly a possibility that the President is talked into one of those. The first or the second are more likely. I would be surprised about the third one, but I don't count that out completely."

The third scenario would be US affirmative support for unification. Even discussion of this possibility, as Dr. Zack Cooper of the American Enterprise Institute noted, "could damage confidence in the US among the Taiwanese population, and could prove detrimental to cross-strait stability."

Europe's Missing Contingency

Brussels has spent considerable energy on AI regulation, data sovereignty, and digital infrastructure resilience. The AI Act, the Data Act, the Chips Act: these represent genuine institutional capacity. What remains absent is any serious contingency planning for a Taiwan scenario.

This gap is not merely strategic. It is operational. European AI deployment depends on hardware that flows through a single chokepoint. European defense modernization assumes access to advanced semiconductors that cannot currently be produced domestically. European climate technology, from smart grids to electric vehicle systems, relies on chips manufactured in facilities that sit within range of Chinese missiles.

The policy response to date has been diversification rhetoric without diversification timelines. TSMC's European facility in Dresden is not expected to reach volume production until 2027 at the earliest, and even then will focus on mature nodes rather than cutting-edge AI chips.

What Happens Next

The summit will produce some form of joint statement. The question is whether that statement contains language on Taiwan that shifts the baseline of US policy. Even American silence on Taiwan, as Claus Soong of the Mercator Institute for China Studies observed, could be a win for Beijing.

For European stakeholders, the implications are threefold. First, any weakening of US commitment to Taiwan increases the probability of a crisis that would devastate European supply chains. Second, the absence of European voice in these negotiations reflects a broader pattern: Europe as rule-maker but not power-broker. Third, the semiconductor dependency that makes Taiwan strategically critical is a European vulnerability that no amount of regulatory sophistication can address without industrial policy follow-through.

The next 72 hours will not determine Taiwan's future. But they may reveal how much of that future Washington is willing to negotiate away, and how little Brussels has prepared for the consequences.