If Taiwan is being invaded, the annexation is happening. There's no longer any reason to disincentivize annexation. Destroying the fabs is about denying China a major prize.
Did Hong Kong destroy its financial sector to deny China a "major prize"? If someone were going to invade and occupy your country, would you destroy your huge source of revenue so they couldn't claim it as a "major prize"? And then what? Stay poor? I feel like people who repeat this view (something they read somewhere) haven't really analyzed it in a social, economic, historical, and geopolitical context. Because if you do, there's zero logic to it, given the consequences for the 23 million people who would still be living on the island afterward.
Destroying the fabs would hurt the West a lot more than China, which is rapidly playing catch up (while US and EU are not).
The other glaring flaw in this pop-geopolitics narrative is that China already has enormous economic leverage over the West, even without the chip supply chain.