China doesn't necessarily want TSMC, they want the Island. TSMC would just be icing on the cake. Even if you destroy the TSMC facilities, you can't evacuate the thousands that work(ed) there over night, China would find them, round them up and force them to rebuild.

Have you seen how much economic damage the Chinese leadership has been willing to inflict upon Hong Kong, and now Shanghai? And on its own tech companies? I don't think they care what happens to TSMC.

The idea is US military just pre-emptively stating that if something like that happens we would be doing nothing and while we would be doing nothing and you would be being occupied could you please destroy your fabs as well, because US would prefer China not having that you know. Irrespective of what it actually means for the occupied populace.

For US it’s “broken nest”, for the Taiwanese that’s the only nest - before or after invasion.