Citadel’s Ken Griffin warns the US economy will enter an immediate ‘great depression’ if China invades Taiwan and cuts off access to its semiconductor industry

Citadel founder Ken Griffin speaks at the CNBC Delivering Alpha conference in New York on September 28, 2022.

The US economy would immediately enter a great depression if China invades Taiwan, according to Citadel founder Ken Griffin.Griffin’s warning is predicated on the US potentially losing access to Taiwan’s semiconductor industry.“We are playing with fire here, let’s be very clear,” Griffin said at a Bloomberg conference on Tuesday.

The US is “playing with fire” as it balances a sensitive relationship between China and Taiwan, according to Citadel founder Ken Griffin.

In an interview with Bloomberg on Tuesday, Griffin said the US would enter an “immediate great depression” if China invades Taiwan and cuts off access to its semiconductor industry. Concerns have grown in recent weeks that China could be eyeing an invasion of Taiwan after Xi Jinping secured another term as president of China.

“The United States has no ability to produce anywhere near the number of semiconductors it needs to run its economy. We are utterly and totally dependent upon the Taiwanese for modern semiconductors in America,” Griffin explained.


And while the recent passage of the CHIPS bill in Washington, D.C. is a good start for onshoring semiconductor production in America, it’s ultimately a drop in the bucket and won’t be enough to replace the output from Taiwan Semiconductor.

“We are playing with fire here. Let’s be very clear. If we lose access to Taiwanese semiconductors, the hit to US GDP is probably on an order of magnitude of 5% to 10%. It’s an immediate great depression,” Griffin said.

But some still see opportunity in Taiwan Semiconductor and are willing to take the opposite side of Griffin’s view with the expectation that China may not ultimately invade Taiwan, including Warren Buffett’s Berkshire Hathaway.

A recent 13F filing from the Omaha-based conglomerate revealed a new 60 million share position in Taiwan Semiconductor, which was valued at about $5 billion on Tuesday.

The new position gives Berkshire more exposure to its largest investment, Apple, as the iPhone maker makes up a big chunk of Taiwan Semiconductors’ revenue, according to estimates from Bloomberg. But that concentrated bet could be a big loser if Griffin’s bleak view on China and Taiwan ultimately pans out. 

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