I see this news as a loss for the US. It has to resort to regulations to stop TSMC from doing business with Huawei. When you can't incentivize your ally, that means your opponent's business is still very attractive. Regulations will only cripple your ally. Taiwan may comply on the outside. But inside, they'll cut under-the-table deals with China. They'll find loop holes to skirt regulations.

Taiwan seems to be heading to be the next Hong Kong. Their political class is still publicly resistant. But their business leaders are slowly surrendering. At some point, the political class will follow. The US will then need to rely on the activism of the young renegade "colonels" like Joshua Wong. Crippling an ally can buy the US some time. But it is losing ground.