I imagine the logic is that if the US has its own domestic chip production and isn’t so dependent on Taiwanese chips, then the US may not care as much if China invades Taiwan.
Terrible reasoning, but yes I think that's what he means
Ignores the fact the island itself acts a buffer to China's SE expansion/projection of power.
There is a lot of strategic value to the island, even without the chips.
That makes sense, and as someone else pointed out, Taiwan has strategic value by itself.