Foreign Firms Strengthen Taiwan Emergency Plans as 92% Maintain Investment Intentions

Companies Prepare for Trouble While Continuing to Invest

Foreign companies in Taiwan are stepping up emergency preparations while remaining committed to the island. The American Chamber of Commerce in Taiwan's 2026 Business Climate Survey found that 46% of respondents were revising business continuity plans, up from 40% a year earlier. At the same time, 92% intended to maintain or increase their investment.

The six percentage point rise in contingency planning captures the balance facing international businesses as of January 28, 2026. Taiwan is a critical centre of semiconductor manufacturing, giving companies strong reasons to stay. It also faces growing military pressure from China, which claims the democratically governed island as its territory and has vowed to reunify with it by force if necessary.

National security ranked as the leading perceived risk to business operations. Yet only 7% of surveyed firms reported significant disruption from tensions in the Taiwan Strait during the previous year. Companies were preparing for a serious emergency while most continued operating without major interference.

Anita Chen, chairperson of AmCham Taiwan, explained that combination of commitment and caution to reporters in Taipei during the survey's release:

Companies choose to stay in Taiwan despite these geopolitical concerns and it's not because things are easy, it's because companies are getting better to manage these risks with resilience planning and business operation planning,

The chamber described the concern driving those preparations:

National security topped the list of foreign companies' perceived risk to business operations,

Business continuity planning means deciding in advance how a company will protect its people and keep essential work running during a crisis. For firms in Taiwan, that can involve alternative suppliers, backup production locations and evacuation arrangements. Those preparations are becoming more common even as investment intentions remain strong.

What the Survey Captures

AmCham's annual survey received responses from 206 of its 411 eligible members. It was conducted shortly before China's latest round of military exercises around Taiwan in late December 2025, giving the results a specific place in the sequence of events: companies described their concerns before those drills began.

China called the exercises Justice Mission 2025. They demonstrated the kinds of military scenarios that have prompted foreign businesses to review emergency procedures, including threats to transport routes and the movement of personnel.

Respondents' personal anxiety about increased military activity remained unchanged at three on a scale of five. Recurring displays of force had become part of the environment in which businesses operated, while companies continued preparing for more severe disruption.

The combination of high perceived danger and limited actual interruption has been described as the "Taiwan paradox". A conflict could threaten regional stability and business survival, but the disruption experienced by most surveyed firms during the previous year remained limited. That gap helps explain why investment and emergency planning can rise together.

Taiwan's economic strengths, particularly its advanced semiconductor industry, give companies reasons to retain their presence. Contingency plans give them ways to respond if the security situation deteriorates. The survey presents both decisions as parts of the same business calculation.

A Tax Agreement Could Support Investment

Taiwan's government has also pressed for a double taxation agreement with the United States, arguing that closer economic ties would benefit investment. The proposal remained stalled in the US Senate.

A double taxation agreement addresses situations in which the same income is taxed in both jurisdictions. Removing those tax barriers would make investment between Taiwan and the United States easier and could encourage more capital to flow in both directions.

Carl Wegner, president of AmCham Taiwan, expressed cautious optimism after conversations in Washington. Describing the prospects for approval, he said:

2026 looked like a good year with positive potential

No approval date was given. For companies weighing expansion, the tax proposal represents a potential improvement to the business environment alongside the separate task of preparing for security risks.

Why Taiwan's Chip Industry Keeps Companies Close

Taiwan Semiconductor Manufacturing Company, or TSMC, captures more than half of the global foundry market. A foundry manufactures chips for other companies, making it an essential link between the businesses that design semiconductors and the products that use them.

TSMC and South Korea's Samsung possess the capability to sustainably operate advanced fabrication facilities producing chips at the 5 nanometer scale. This manufacturing capacity connects Taiwan to artificial intelligence, 5G infrastructure and autonomous vehicles, helping explain why companies remain committed despite security concerns.

Taiwan's importance to chip production is often described as a "silicon shield". The idea is that the damage a conflict would cause to global supply chains gives other countries a powerful reason to protect stability around the island. Losing production would affect businesses far beyond Taiwan.

The US National Security Council has reportedly estimated that a Chinese attack resulting in the loss of TSMC would cause a $1 trillion disruption to the global economy. The figure conveys the scale of the economic exposure surrounding a single company and its manufacturing network.

Christopher Wray, then director of the FBI, warned in 2022 about the business consequences of an invasion:

represent one of the most horrific business disruptions the world has ever seen,

Wray also said potential sanctions against China would harm the global economy:

at a much larger scale

His comparison was with sanctions imposed on Russia following its invasion of Ukraine. For businesses, the danger therefore extends beyond damage to factories or interrupted shipping. Government restrictions introduced during a conflict could also disrupt trade, payments and commercial relationships.

Chip Trade Is Already Shaped by Political Decisions

Huawei's relationship with TSMC illustrates how technology trade has already become tied to competition between Washington and Beijing. The US Commerce Department added the Chinese technology company to its Entity List in 2019 and amended export controls to restrict its semiconductor acquisitions.

The Entity List is a tool for imposing restrictions on trade with designated organisations. Export controls govern which products or technologies can be supplied and under what conditions. Those measures compelled TSMC to dramatically change its relationship with Huawei, which had been a major buyer of advanced chips.

Taipei recently blacklisted Huawei and Semiconductor Manufacturing International Corp, or SMIC. Beijing responded by threatening "forceful measures". Taiwan's commercial decisions are therefore increasingly bound up with the wider contest over access to advanced technology.

For multinational companies, this creates a second layer of planning alongside physical security. A factory may remain operational while rules governing its customers, suppliers or technology change. Businesses must account for both kinds of interruption when deciding how much activity to keep in Taiwan.

Military Pressure and Japan's Evacuation Preparations

China staged large military exercises in December 2025 in response to a recent US arms package for Taiwan worth $11 billion. Taiwan's National Security Bureau reported a record 3,570 incursions by Chinese military aircraft into Taiwan's surrounding airspace during 2025.

The military activity was intended to test Taiwanese defences and exert political pressure. Its pace also placed corporate planning within a wider regional security problem, with neighbouring Japan preparing for the possibility of conflict near its territory.

Japan unveiled plans to evacuate more than 100,000 civilians from the remote Sakishima islands near Taiwan. Ships and aircraft would transport residents and tourists to Kyushu and other western Japanese prefectures within six days.

Japan's Defense Ministry also announced plans to deploy units equipped with missiles for air defence on Yonaguni, an island about 100 kilometres from Taiwan. Construction had begun on temporary underground shelters stocked with supplies for two weeks. Tokyo also warned Japanese companies that they would be "on their own" in a conflict scenario.

The main developments span several years:

• 2019: The US Commerce Department added Huawei to its Entity List, beginning restrictions that reshaped its access to semiconductor production.
• 2022: FBI Director Christopher Wray warned of enormous business disruption from a Taiwan invasion. Beijing also cut diplomatic channels after Nancy Pelosi's visit to Taiwan.
• 2023: Beijing refused crisis hotline calls during the Chinese surveillance balloon incident.
• March 2025: President Donald Trump questioned the balance of obligations in the US security treaty with Japan.
• Late December 2025: China held Justice Mission 2025 after the AmCham survey had been conducted.
• January 28, 2026: Companies were increasing contingency preparations while Taiwan's proposed special defence budget remained blocked.

Allies Weigh Their Own Responsibilities

Japan's preparations reflect concern among US allies about Washington's commitment to the region. President Donald Trump complained in March 2025 that the security treaty between the United States and Japan was not reciprocal:

We have a great relationship with Japan, but we have an interesting deal with Japan that we have to protect them, but they don't have to protect us.

Such comments have prompted allies to develop more independent contingency arrangements while increasing their own defence spending. Japan's evacuation plans, missile deployments and shelters show how preparations for a Taiwan crisis reach beyond the island itself.

Companies face a related practical problem. Governments are preparing to move large numbers of people during an emergency, while businesses must determine how their employees would leave, where they would go and which operations could continue. Decisions about evacuation become harder once transport capacity is under pressure.

What Corporate Emergency Plans Involve

Foreign firms' preparations range from diversifying supply chains to drawing up detailed evacuation procedures. Basic measures include identifying alternative sources of semiconductor components, finding backup manufacturing sites outside the region and testing logistics networks against a possible blockade.

A blockade would restrict movement into or out of Taiwan, threatening deliveries even where production facilities remained intact. Planning for that scenario requires companies to examine how materials arrive, how finished goods leave and which routes could become unavailable.

Global Guardian, a security consultancy, has conducted tabletop exercises with Fortune 1000 companies. In these exercises, managers work through simulated emergencies and make decisions before facing them in real life. The scenarios cover both the best and worst possible outcomes.

Participants consider how quickly personnel whose presence is not essential could be evacuated, which warning signs should trigger immediate departure and how financial assets outside China and Taiwan could remain accessible if banking systems were disrupted.

Rob Joyce, the National Security Agency's head of cybersecurity, urged corporate audiences to make those decisions early:

You don't want to be starting that planning the week before an invasion, when you're starting to see the White House saying it's coming. You want to be doing that now and buying down your risk and making those decisions in advance.

Joyce's warning extended to compliance teams and company lawyers. A war would bring immediate challenges involving sanctions, export controls, cybersecurity, government procurement requirements and rules against bribery under the Foreign Corrupt Practices Act. Protecting people and production would have to happen alongside decisions about which transactions remained lawful.

Economic Warning Signs Companies May Watch

Analysts at the Center for Strategic and International Studies, or CSIS, have identified economic measures that might signal Beijing's intentions regarding Taiwan. The potential warning signs concern money, strategic goods and the ability of people to leave China.

Possible measures include stronger controls on capital crossing borders, rapid sales of Chinese assets held abroad, including US bonds, a suspension of critical mineral exports and restrictions on overseas travel by Chinese elites. Such actions could help Beijing prepare for external pressure while also risking an early disclosure of its intentions.

Capital controls restrict how money moves into or out of a country. Asset sales could bring funds home, while limits on mineral exports could affect industries abroad. Taking these steps rapidly could trigger hoarding or market panic, creating costs for China before any military action.

China has already pursued measures over several years to reduce its exposure to external pressure. They include reducing reliance on US dollars in international finance, stockpiling critical commodities and requiring state entities to move away from foreign software.

CSIS analysts compare these preparations with Russia's strategy before its 2022 invasion of Ukraine. The approach known as "fortress Russia" involved accumulating international reserves and reducing dependence on assets denominated in dollars.

The analysts also urge caution about how governments would respond to economic warning signs. Observers failed to interpret Moscow's economic measures as primary indicators of an impending invasion. Their concern is that policymakers might similarly struggle to recognise and act on preparations by China.

Taiwan's Defence Budget Faces Political Resistance

President Lai Ching-te has proposed a special defence budget of roughly $40 billion over eight years. It would fund new missile defences, weapons capable of striking accurately over long distances and unmanned systems.

Opposition parties controlling Taiwan's legislature had blocked the bill at least eight times since December 2025. They demanded more transparency about specific procurement plans, leaving a major defence proposal stalled while foreign companies strengthened their own emergency arrangements.

The Trump administration has pressed Taiwan to raise defence spending to 5% of gross domestic product by 2030, from approximately 2.4%. Gross domestic product, or GDP, measures the size of an economy. The proposed target would more than double the share devoted to defence.

The American Institute in Taiwan, which serves as the de facto US embassy, explicitly supported Lai's special budget. Its director, Raymond Greene, stated:

What Taiwan's service members need now are the tools to accomplish their mission.

Delays in Taipei could fuel doubts in Washington about Taiwan's willingness to defend itself. Those doubts matter to the investment environment because confidence in security support is part of the wider calculation businesses make when committing money to the island.

US Strategy Combines Deterrence With Ambiguity

The Trump administration's 2026 National Defense Strategy promises a "denial-based defense" along the First Island Chain. This approach seeks to prevent an opponent from achieving its military objectives along the chain of islands that forms a key boundary in the western Pacific.

The strategy omits specific commitments regarding Taiwan, leaving a "blank space" intended to preserve diplomatic room for manoeuvre. That silence seeks to maintain deterrence while giving the president flexibility. Critics argue that it risks confusion among allies and potential adversaries about how Washington would respond.

The document also makes communication between the US military and China's People's Liberation Army a strategic priority, seeking "strategic stability" and a way to prevent an accidental war. Crisis communication is meant to allow both sides to clarify intentions before an incident escalates.

Beijing has previously used the withdrawal of communication as a tool during periods of tension. It cut diplomatic channels following Nancy Pelosi's 2022 visit to Taiwan and refused crisis hotline calls during the 2023 Chinese surveillance balloon incident.

Kurt Campbell, a former US coordinator for the Indo-Pacific, described the problem with hotlines to Beijing:

ring endlessly in empty rooms.

For companies making emergency plans, military strength, political commitments and functioning communication channels are all parts of the security environment. Washington's strategy combines a stronger defensive posture with uncertainty about specific responses.

Companies Seek Alternatives Without Abandoning Taiwan

Institutional investors estimate that more than half of the world's top 1,600 companies face elevated risk from their "entanglement" in China. The gradual separation of American and Chinese technology sectors creates both risks and opportunities as commercial relationships become increasingly subject to political decisions.

Google and Apple have moved some manufacturing operations from China to Vietnam amid concerns about geopolitical risk and China's former COVID-Zero policies. These shifts illustrate how companies can redistribute parts of their operations while continuing to depend on production networks elsewhere in the region.

Complete separation remains impractical for many sectors because Taiwan holds an essential position in semiconductor manufacturing. Replacing some assembly operations is a different task from replacing the capacity to produce advanced chips.

The practical choice for many businesses is therefore how to prepare for a situation requiring rapid personnel evacuation while preserving some operational continuity. Alternative suppliers, production sites and access to funds can reduce exposure, while continued investment reflects the value companies still see in Taiwan.

AmCham's survey puts numbers on that approach: 46% were revising continuity plans, while 92% intended to maintain or increase investment. The 7% reporting significant disruption during the previous year explains why preparations for a severe crisis can coexist with confidence in current operations.

Key Points

• AmCham Taiwan's 2026 survey received responses from 206 of 411 eligible members.
• 46% of respondents were revising business continuity plans, up from 40% a year earlier.
• 92% intended to maintain or increase investment, while 7% reported significant disruption from Taiwan Strait tensions during the previous year.
• National security ranked as the leading perceived business risk, and personal anxiety remained at three on a scale of five.
• Taiwan's chip industry remains central to investment decisions, with TSMC holding more than half of the global foundry market.
• Japan planned to evacuate more than 100,000 civilians from islands near Taiwan within six days.
• Lai Ching-te's proposed defence budget of roughly $40 billion over eight years had been blocked at least eight times since December 2025.
• The US defence strategy combines defence along the First Island Chain with ambiguity about Taiwan and efforts to improve military communication with China.
• Corporate preparations cover personnel evacuation, alternative production, financial access and compliance with possible emergency restrictions.