Instead of a risky invasion, Xi Jinping's preference is to slowly suffocate Taiwan's will to resist. This strategy involves chipping away at U.S. commitments and eroding the conviction of regional allies, buying time while avoiding a costly direct conflict.

Counterintuitively, Thompson argues against cutting China off from Taiwan's semiconductor manufacturing (TSMC). A China dependent on Taiwan is less likely to act aggressively toward it. Creating a situation where the U.S. relies on Taiwan while China does not increases the risk of conflict, as China's optimal move could become disabling that key U.S. asset.

Beijing’s core strategy for Taiwan is to convince its populace that "resistance is futile" and no outside help is coming. U.S. arms sales and rhetorical support from allies are particularly disruptive because they directly counter this psychological narrative of isolation, undermining China's goal of a coerced unification.

A potential invasion of Taiwan by China is less likely due to internal military purges and dissent than to US military posturing. An authoritarian leader like Xi Jinping cannot launch a complex invasion if he doesn't trust his own generals, making domestic instability a powerful, albeit unintentional, deterrent.

China's showcase of advanced military hardware, like its new aircraft carrier, is primarily a psychological tool. The strategy is to build a military so 'forbiddingly huge' that the US would hesitate to engage, allowing China to achieve goals like reabsorbing Taiwan without fighting. This suggests their focus is on perceived power to deter intervention.

Taiwan's willingness to prepare and fight is heavily predicated on its belief in potential US support. Ambiguous US policy, characterized as a move from 'strategic ambiguity to just ambiguity,' directly erodes Taiwan's domestic resolve and mobilization efforts.

Banning chip sales to China reduces its reliance on Taiwan's TSMC, lowering the economic cost of an invasion. Resuming sales re-establishes this crucial economic link, creating a powerful disincentive for conflict and acting as a geopolitical stabilizer, despite seeming counterintuitive to gaining a direct AI advantage.

Focusing solely on deterring a military invasion of Taiwan is insufficient. The US must develop capabilities to counter China's gray zone tactics and manage the economic fallout of a crisis. Failure to do so could lead to a US concession and a Chinese victory without a shot being fired.

While the U.S. is preoccupied with Iran and the Strait of Hormuz, China has significantly increased its military presence around Taiwan. This may not be just a show of force, but a strategic dress rehearsal for an invasion, testing capabilities while global attention is focused elsewhere.