Flight Tracker: Taipei --> Phoenix

America’s Fate in Taiwan’s Fabs

Taiwan today stands at the eye of an innovation and military superstorm. The world’s most advanced chips are produced on a single island within missile range of China’s coast.

On one front, Taiwan anchors the global semiconductor supply chain. On the other, it is racing to deter an increasingly assertive Beijing with asymmetric military strategies.

To reduce reliance on Taiwan, the U.S. — in partnership with chip giant TSMC — is pouring billions into new fabrication plants in Arizona. But these facilities don’t run themselves.

“America invented the semiconductor integrated circuit. But for decades, America shipped its semiconductor expertise overseas,” says Paradigm’s science-and-technology expert Ray Blanco. “Now the bill has come due, and we're scrambling to get our expertise back before it’s too late.”

The shortage isn’t in equipment — it’s in expertise. “Every two weeks, charter flights carrying 300 Taiwanese engineers and their families have been touching down at Phoenix Sky Harbor International Airport,” Ray notes. “These aren't routine business trips. They're emergency knowledge transfers.

“Chipmaking is more than equipment — it's about people understanding the thousands of variables that determine whether a fabrication process succeeds or fails,” Ray adds.

“This knowledge can't be downloaded or learned from textbooks. It exists in the minds of a relatively few people globally, most of whom work for companies based in Taiwan.”

As editor Sean Ring at our sister e-letter The Rude Awakening comments: “If OPEC had us by the throat in the ’70s, TSMC has us by the brainstem now.

“One company on one island — an island Beijing swears is theirs — makes the chips that run your phone, your bank, your car, your grid, your weapons and your AI.

“This isn’t hyperbole. Taiwan’s TSMC is the only foundry on Earth that can mass-produce the most advanced semiconductors at scale,” says Sean. “Every Nvidia chip powering AI, every Apple M-series chip running your laptop, every AMD part the Pentagon leans on — fabricated there. Without Taiwan, America’s AI dreams collapse like a house of cards.”

And Taiwan’s grip on chipmaking doesn’t just drive earnings; it shapes America’s national priorities. But the dependence cuts both ways.

While Arizona fabs rely on Taiwanese engineers, Taiwan itself leans heavily on U.S. technology for defense. At the heart of Taiwan’s strategy is a “high-low” drone doctrine: pairing expensive cruise missiles with swarms of cheap, expendable drones.

The goal, the South China Morning Post reports, is to “exhaust enemy defenses” and still strike deep inside mainland China. Taiwan’s Ministry of National Defense aims to field nearly 50,000 drones by 2027 — treating them as “expendable munitions.”

But bottlenecks remain. Asia Times highlights gaps in training and logistics: “Taiwan’s limited training infrastructure and logistical base may reduce operational effectiveness,” with audits pointing to shortfalls in operator qualifications and night-flight readiness. To close this expertise gap, Taiwan is turning to American partners.

Its state-run defense lab has signed a deal with Auterion, a U.S. software company whose drone systems proved their worth in Ukraine. That software is already being built into drones made by Taiwan’s Thunder Tiger, including a 25,000-unit run of its “Overkill” model.

Other U.S. defense firms — like Boeing’s Insitu and Shield AI — are also contributing technology, drawing Beijing’s sanctions in the process.

Military ties are deepening too. This summer, more than 500 Taiwanese troops joined U.S. forces in Michigan during the National Guard’s Northern Strike exercises. Meanwhile, Washington has quietly stationed about 500 U.S. personnel in Taiwan — a visible expansion of defense cooperation.

Overseeing these initiatives is the American Institute in Taiwan (AIT). AIT director Raymond Greene argues that U.S. research combined with Taiwan’s manufacturing base can boost both deterrence and industrial growth.

For all the new cooperation in drones and defense, Sean and Ray warn that Taiwan’s premier chipmaker, TSMC, isn’t just a business — it’s both a shield and a vulnerability.

“The so-called ‘Silicon Shield’ is supposed to deter China from attacking — because why would Beijing destroy the very factories they need? But China doesn’t need to destroy TSMC. They just need to control it,” Sean says.

Ray adds: “America faces a technological sovereignty crisis that decades of outsourcing created and only emergency measures can now solve. They’re lifelines for maintaining technological independence if the current system fails.”

That’s the paradox at the heart of the Taiwan question. Silicon is both deterrent and temptation — the reason Beijing might hesitate to invade, and the very prize it would seize if it did. No amount of Arizona fabs or drone fleets can erase that risk.

As the world eyes Taiwan, it isn’t just war or peace on the line. It’s the backbone of the global economy. From AI to energy grids, from smartphones to weapons systems, the future runs on Taiwanese silicon. And with each passing month, the hand hovering over this ‘kill switch’ holds greater sway over war, peace and prosperity.

No Relief for the Middle Class

Inflation chipped away at Americans’ earnings last year, leaving most households no better off than before the pandemic, according to new data from the U.S. Census Bureau.

The bureau reports that inflation-adjusted median household income was $83,730 in 2024, essentially unchanged from 2023. That figure is roughly the same as in 2019, showing how rising prices have erased gains from a brief post-pandemic recovery.

Not all groups were affected equally. Households at the top of the income ladder saw a 4.2% increase, while changes for middle- and lower-income families weren’t statistically significant. Incomes for Black households fell, while they rose for Asian and Hispanic households. Men working full-time saw a 3.7% gain; women’s earnings showed no meaningful change.

The poverty rate also held steady. By one broad measure, which includes taxes, government aid and essential expenses, 12.9% of Americans — or 43.7 million people — lived in poverty in 2024. Rates were higher for seniors, at 15%, and for Black Americans, at 20.7%. The narrower official measure, which only counts pretax income, showed 10.6% in poverty.

“The middle class is tapped out,” says Heather Long, chief economist at Navy Federal Credit Union, warning that households have little cushion if prices climb further.

The report highlights the economic backdrop at the end of the Biden administration. But with growth slowing and job numbers weakening, the very concerns that helped return Donald Trump to the White House show little sign of easing.

Gold Enters Uncharted Territory

Gold has surpassed its inflation-adjusted record high that stood for 45 years. This means when adjusted to today’s dollars — accounting for decades of inflation — gold prices are now higher than ever before.

The previous real-terms peak dated back to January 1980 when gold hit its historical zenith, $850 per ounce, in purchasing power terms.

Adjusting for inflation gives a clearer picture of what gold is really worth. By topping its 45-year inflation-adjusted peak, gold has moved into uncharted territory, highlighting its lasting role as a safe haven for wealth, especially during times of economic uncertainty.

At the time of writing, gold’s priced at $3,680.90 per ounce. Silver? Up 0.65% to $41.60. As for oil, crude’s up 2.15% to $64 for a barrel of West Texas Intermediate.

In terms of stocks, the S&P 500 set a new record high today — the index is up 0.35% presently to 6,535 — this as Wall Street interprets bad news (see PPI below) to mean the Fed will cut rates at its meeting later this month. The tech-heavy Nasdaq, meanwhile, has gained 0.20% to 21,915. But the Big Board’s down 0.55% to 45,450.

• Wholesale inflation, measured by the Producer Price Index (PPI), slipped 0.1% in August even as economists expected PPI to rise 0.1% for the month. Year-over-year, PPI is still running hot at 2.6%, with the core gauge — excluding food and energy — up 2.8%, proving price pressures aren’t going away anytime soon.

Last, we mention the crypto market: Bitcoin and Ethereum are both up about 2% to $113,725 and $4,375 respectively.

When Trade Wars Issue Refunds

In a rare procedural step, the U.S. Supreme Court has agreed to swiftly review President Trump’s sweeping tariffs, consolidating two major cases — Learning Resources Inc. v. Trump and VOS Selections Inc. v. Trump — and scheduling oral arguments for the first week of November 2025.

Lower courts struck down significant portions of Trump’s tariffs. A federal appeals court issued a 7-4 ruling in August, concluding that the International Emergency Economic Powers Act (IEEPA) does not permit the president to unilaterally impose tariffs without congressional approval.

Meanwhile, the U.S. Court of International Trade also found “Liberation Day” and reciprocal tariffs exceeded presidential power under IEEPA.

Treasury Secretary Scott Bessent warns if the Supreme Court upholds these lower-court decisions, the government could be legally required to refund between $750 billion–1 trillion in duties already collected.

• This wouldn’t happen automatically. Instead, importers who already paid duties would file claims through the U.S. Customs and Border Protection which administers tariff collections. Bessent points to the scale of potential outflows the Treasury would be forced to finance if courts say importers deserve their money back.

Big picture, the outcome of this expedited Supreme Court decision will influence much more than trade policy — it may redefine the boundaries of executive fiscal authority under emergency laws, setting a key constitutional precedent.

A Skin-Crawling Crawl Space Secret

In a twist that sounds plucked from a low-budget horror film, a 40-year-old man was discovered secretly living in the crawl space beneath a home near Portland, Oregon.

Neighbors had been alarmed by odd noises, prompting a call to local authorities. On Sept. 3, deputies from Clackamas County responded after a witness spotted an unfamiliar person entering the back of the house and, moments later, eerie lights flickering from below.

Gaining the homeowner’s approval, officers forced open the locked door to the crawl space to find Beniamin Bucur in situ…

Source: Clackamas County Sheriff’s Office

… complete with a makeshift bed, lighting, a TV set plugged in via extension cord and even charging devices. The surprises continued (possibly?) when police uncovered drug paraphernalia during their sweep.

Bucur now faces charges including trespassing, theft of utilities and possession of methamphetamine, with bail set at $75,000.

File this one under: You know the housing shortage is bad when…

Take care, reader!

Best regards,

Emily Clancy
Associate editor, Paradigm Pressroom's 5 Bullets