By Al Root

President Xi had a message for President Trump: Don't mess with Taiwan.

During their historic summit, Xi warned that if the U.S. and China don't handle Taiwan properly, conflict could ensue. Any conflict over Taiwan would risk a global economic shock of unprecedented proportions.

For investors, the importance of the island, home to some 23 million people, about 80 miles off the coast of China, and the size of roughly Maryland, simply cannot be overstated -- especially in this AI-fueled stock market rally.

Taiwan is home to Taiwan Semiconductor Manufacturing Co., or TSMC. The company is worth about $1.9 trillion and manufactures an estimated 90% of the world's most advanced chips. Apple and Nvidia are TSMC's two largest customers, accounting for almost 40% of sales, according to Bloomberg.

Apple and Nvidia are worth a combined $9.9 trillion.

Other major chip makers are big customers, including Intel, AMD, Broadcom, and Qualcomm. Those four are worth another $3.5 trillion.

Those are some of the companies directly connected to TSMC. Then there are customers of the chip companies, such as Nvidia. Microsoft, Amazon.com, Alphabet, Meta Platforms, and Oracle are some of its biggest customers, accounting for almost half of its sales.

Those five companies add another roughly $13 trillion in market value.

TSMC also buys a lot of equipment. It's expected to spend $55 billion on new plants and equipment in 2026. That's close to Intel's expected $58 billion in total revenue. A lot of that money flows to equipment makers such as ASML, Applied Materials, and Lam Research, which are worth more than $1 trillion combined.

All of those companies are worth a combined $30 trillion. (The S&P 500 market capitalization is close to $60 trillion.) That also doesn't include privately held companies such as SpaceX, OpenAI, and Anthropic, which depend heavily on the rise of AI computing. Those three are worth another roughly $3 trillion combined.

None of those numbers includes the impact on AI data center infrastructure providers such as Vertiv, electrical component makers such as Amphenol, semiconductor material suppliers such as Qnity Electronics, or data center power equipment providers such as Caterpillar and GE Vernova. (Those five are worth a combined $1 trillion.)

A good portion of the U.S. stock market runs through Taiwan in some way or another. To be sure, TSMC and others, such as Intel, are trying to diversify capacity outside of the island, but that process is slow and hasn't really made a dent in the industry structure yet. TSMC remains several times larger than Intel in leading-edge chip manufacturing capacity.

Of course, President Trump and the executives traveling with him know all this, which is why investors might not have to worry too much.

Still, they should know the stakes.

Write to Al Root at allen.root@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

May 14, 2026 11:06 ET (15:06 GMT)

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