The trade war that the United States has imposed on China for almost five years is heating up with more and more companies from the country being included in the entity list. Barriers to access to AI chips, AI models, chip-making machines and high tariffs were introduced by the Joe Biden administration. This raises the question of why China didn't just attack Taiwan to get TSMC's chip development technology?
The simple answer is that it is bad for the world economy. The longer answer is that if Taiwan is attacked even the chip producing machines in Taiwan will automatically be unusable. According to a Bloomberg report, ASML produces the EUV lithography machines needed to produce the on-chip circuits that can be remotely deactivated. Special software allows a "kill switch" to be pressed to render the ASML machine unusable.
In the same report, ASML is believed to have done various simulations for various scenarios in case Taiwan is attacked. The Netherlands, which is an ally of the United States, has already agreed to prevent the sale of ASML machines to China, as well as Japan, which also manufactures lithography machines.
TSMC received billions of dollars in funding from the United States to open a chip manufacturing plant in the country. Under the CHIP Act, America wants to bring back high-tech production capabilities to the country after decades of transferring them to China to increase profits. But now China can usurp their status as the most developed country and previously there were technological barriers and trade is now done.