TL;DR: The prospect of China invading Taiwan has become increasingly more likely in recent years, which is why the US Department of Defense has come up with a strategy for protecting the island should the worst happen: an "unmanned hellscape" of drones.
At the International Institute for Strategic Studies' annual Shangri-La Dialogue (via Wired), US Indo-Pacific Command chief Navy Admiral Samuel Paparo talked about the plan to defend Taiwan in the event of a Chinese invasion: "I want to turn the Taiwan Strait into an unmanned hellscape using a number of classified capabilities, so that I can make their lives utterly miserable for a month, which buys me the time for the rest of everything."
China has been able to produce cheaper versions of the drones used by the US, meaning they can produce them in greater numbers and faster, giving the country an advantage in any potential conflict over Taiwan.
Last year, the DoD unveiled the Replicator initiative, a program designed to accelerate the deployment of autonomous systems, such as drones, across various military branches. It's hoped that Replicator can produce thousands of AI-powered uncrewed weapons to help it overcome China's advantage of having more ships, people, and missiles.
The first part of Replicator will be the deployment of thousands of autonomous systems across multiple domains within the next 18 to 24 months, part of the Pentagon's strategy to counter China's armed forces buildup. However, there are fears that the US does not have the capacity to produce drones at the required scale needed for a war with China.
The Taiwanese government is also putting more focus on drones as a means of protection. It's set to acquire 1,000 extra AI-powered attack drones next year and plans to expand its domestic production capabilities. Taiwan also wants to lessen reliance on Chinese-made commercial parts; because of DJI's dominance of the commercial market, Taiwan would have to hack any Chinese drones it was using to ensure they couldn't be tracked or hacked by China, noted Stacie Pettyjohn, a senior fellow and director of defense programs at the Center for a New American Security.
"Consider that for most of the first-person-view kamikaze drones used in Ukraine right now, all of those components are sourced from China," Pettyjohn added. "Even Ukraine has tried to wean itself off Chinese sources and hasn't found anything at a comparable price point."
China is also investing more in its own autonomous systems, including a substantial amount to produce weapons with swarming capability.
Most analysts believe that a Chinese invasion of Taiwan would be fairly disastrous for the electronics industry and, according to Commerce Secretary Gina Raimondo, could lead to a deep and immediate US recession. One of the biggest issues is what would happen to TSMC in such a scenario. There has been talk of its facilities being disabled remotely and even the US bombing the plants to stop them from falling into China's hands, but many say they would simply become inoperable.
Last month, Donald Trump said Taiwan should pay the US for its defense of the island. "You know, we're no different than an insurance company. Taiwan doesn't give us anything," he said.