Only ASML currently has that technology.
And it turns out, the photolithography device isn’t really a plug and play device. It’s very fussy. It breaks often. And it requires an army of engineers (as cheap as possible), to man the devices, and to produce the required yield, in order to make the whole operation profitable.
This is the Achilles’ Heel of the whole operation.
I suspect that China is researching and producing their own photolithography devices, independent of American, or western technology. And when they crack it, then they will recapture the entire Chinese market for themselves. And TSMC will become irrelevant to any strategic or tactical plans for them.
Are there any signed agreements that would enforce this? If China one day suddenly decides to take Taiwan, would the US or Europe step in with military forces?
Not guaranteed "mutual defense" of any sort, but the US at least has committed itself to helping Taiwan protect itself with military aid. The section on "Military provisions" is probably most helpful.
[1] https://fortune.com/2021/01/18/chinas-2020-gdp-world-no-1-ec...
> The Taiwan Relations Act does not guarantee the USA will intervene militarily if the PRC attacks or invades Taiwan
Taiwan's share of the semiconductor industry is 66% and TSMC is the leader of that industry. Semiconductors helps keep Taiwan from China's encroachment because it buys them protection from allies like the US and Europe, whose economies heavily rely on them.
To Taiwan, semiconductor leadership is an existential question. To America, semiconductors are just business.
This means Taiwan is also likely to do more politically to keep TSMC competitive, much like Korea with Samsung.