Elon Musk weighed in this week on Taiwan—where his comments did not go over well.
“The official policy of China is that Taiwan should be integrated,” Musk said in an interview with CNBC’s David Faber. “One does not need to read between the lines. One can simply read the lines. There’s a certain inevitability to the situation.”
On Friday in Taiwan, foreign minister Joseph Wu responded to the Tesla CEO, tweeting that the Chinese Communist Party’s “bullying & threats are a concern, especially for those who would rather stay free & democratic.”
In China, meanwhile, the state-controlled China Daily ran with the headline “Elon Musk: Taiwan should be integrated.” China considers Taiwan to be its territory—despite the fact that Taiwan is democratic and self-governed—and has threatened to use force if necessary to gain control of it.
A Chinese takeover could have far-reaching economic consequences. Taiwan is home to Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest maker of computer chips by volume.
Last November, Citadel CEO Ken Griffin said America was “utterly and totally dependent on the Taiwanese for modern semiconductors.” The billionaire hedge fund chief added, “If we lose access to Taiwanese semiconductors, the hit to U.S. GDP is probably in the order of magnitude of 5% to 10%. It’s an immediate Great Depression.”
Legendary investor Warren Buffett this week dumped the rest of Berkshire Hathaway’s $4 billion stake in TSMC. He told Japan’s Nikkei last month that the threat of war was a “consideration” in dumping the bulk of the stake.
Last October, Musk told the Financial Times that a conflict over Taiwan is inevitable. His recommendation, he said, “would be to figure out a special administrative zone for Taiwan that is reasonably palatable…they could have an arrangement that’s more lenient than Hong Kong.”
China’s foreign ministry responded to his statements by reiterating that China would “resolutely crush 'Taiwan independence' secessionist attempts, resolutely stop interference by external forces, and resolutely defend national sovereignty and territorial integrity."
Musk this week compared China and the rest of the global economy to “conjoined twins” and warned of severe consequences from any attempt to separate them. Tesla has a gigafactory in Shanghai and China is a key market, but he said that “the situation is actually a lot worse for a lot of other companies…I’m not sure where you will get an iPhone.”
In Taiwan, however, foreign minister Wu added that China’s “expansionist policy violates rules-based international order & the status quo. Mr. @ElonMusk, other than money, there is something we call VALUES.”
