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

His point is simple but devastating: The world’s most advanced chips — those that run our phones, our banks, our grid and even the Pentagon’s weapons — are made in Taiwan, almost entirely by one company, TSMC.

Not to mention: “Without Taiwan,” Ring writes, “America’s AI dreams collapse like a house of cards.” And Washington knows it.

That’s why billions of dollars are being poured into new semiconductor plants in Arizona. But the project is behind schedule, over-budget and dependent on engineers flown in from Taiwan itself. In other words, America’s “safety net” has some gaping holes.

The uncomfortable truth is this: More than 90% of the most advanced chips come from one island that Beijing insists is theirs. This is what Sean calls the “Silicon Sword” hanging over America’s head.

If China ever takes control of Taiwan — by force or blockade — the global economy would seize up. Your smartphone, bank, grid and more — everything powered by silicon — would flicker and stall.

Your Rundown for Monday, September 8, 2025...

The Drone Swarm Gamble

For decades, Taiwan has faced the grim arithmetic of military balance. China’s armed forces dwarf its own. Taiwan cannot hope to match Beijing tank for tank, ship for ship or jet for jet.

But in the era of Ukraine, a new idea has taken root: Small, cheap, expendable drones can harass, delay and even cripple a much larger adversary.

Taiwan is leaning into that lesson with remarkable speed. Officials have begun buying drones in staggering numbers — tens of thousands of them — while also working with American companies to stitch them into a modern defense network.

• Some are nimble quadcopters, buzzing just above the treetops
• Others are longer-range “loitering” drones, circling until a target appears
• Still others are maritime, small robotic boats modeled on Ukraine’s sea drones, capable of ramming or disabling much larger vessels.

The key, as Taiwan’s defense planners put it, is to treat drones like bullets. They’re not prestige weapons to be polished and admired — they’re tools to be used, lost and immediately replaced.

A single missile defense system may cost millions; a drone costs a fraction of that. And when deployed in swarms, their effect is magnified.

The U.S. is playing a direct role here, not just as an arms supplier but as a partner. This summer, Washington delivered the first batch of attack drones to Taiwan, while defense firms like Anduril are embedding their battlefield software to help coordinate swarms of machines in real time.

The result is a strategy that doesn’t rely on winning head-on battles, but on making any invasion a nightmare of constant attrition.

It’s not foolproof. Drones can get jammed, shot down or outpaced. Taiwan’s defense industry still struggles to scale production, and it remains reliant on U.S. parts.

China is busy building its own formidable war-ready force. Analysts estimate that China may operate 10,000–15,000 military drones, in fact, ranging from small crash-in weapons to long-range surveillance systems. (Of course, Beijing isn’t publicizing numbers.)

The shift is unmistakable: The future of warfare is unmanned.

And Taiwan is betting its survival on a combination of silicon and swarm. While the U.S. is betting on continued access to TSMC — the one factory that keeps its economy, its weapons and its digital future alive.”

Market Rundown for Monday, September 8, 2025

S&P 500 futures are up 0.10%, just under 6,500.

Oil is up 2.15% to $63.21 for a barrel of WTI.

Gold’s hanging out at $3,656.70 per ounce.

Bitcoin’s up 0.65%, under $112K.