The ongoing military tensions between China and Taiwan are triggering an unprecedented semiconductors crisis, which can completely halt the technology sector worldwide.
Taiwan is a hub of global semiconductor manufacturing, and any disruption in the supply chain will impact global tech markets. The consequences of semiconductors supply chain disruption will be felt across the board ranging from the Silicon valley of the United States to the technological sectors of China and Europe.
While Russia’s gas and oil can be replaced with alternate sources of energy, the semiconductors of Taiwan are irreplaceable.
This global dependence on Taiwan’s semiconductors is the primary reason why the US has recently passed the $52 billion CHIPS and Science Act of 2022, which aims to bolster America’s semiconductors manufacturing industry. However, even though the US has passed the act, America will still not be independent in semiconductors anytime soon since the process of erecting and developing industries takes a significant amount of time.
Why Does Taiwan’s Semiconductor Industry Even Matter?
The importance of Taiwan’s chip industry is also evident from US House Speaker Nancy Pelosi’s visit to Taiwan, in which she even met with the chairman of a semiconductor giant, the Taiwan Semiconductor Manufacturing Company, famously known as TSMC.
TSMC is one of the Taiwanese companies that will be subsidized by the US under the CHIPS act for launching its semiconductors plant in America. Currently, the world is heavily dependent on TSMC for its role in driving the aerospace and electronics industry of the world.
Even the slightest disruption in TSMC operations is bound to trigger a worldwide semiconductors crisis in the automobile sector which will bring an exponential wave of unemployment in the sector.
TSMC is the exclusive supplier of Apple’s chips and processors for iPhones and Macbooks.
This is the reason why TSMC executives are also worried about the ongoing warring ambitions of China and Taiwan. TSMC chairman Mark said, “If you take a military force or invasion, you will render TSMC factory nonoperable…(TSMC’s manufacturing) depends on the real-time connection with the outside world, (so) nobody can control TSMC by force.”
Taiwan’s Tech Hub in Crisis
In Taiwan, the hub of the semiconductors industry is the Hsinchu Science Park, which employs nearly 150,000 people in a variety of sectors. Famously known as “Taiwan’s Silicon Valley,” nearly 70 % of employees of this park are working in the chips sector.
Whenever China decides to go into an all-out war against Taiwan, the semiconductor crisis is bound to happen. Chinese President Xi Jinping has already vowed “peaceful reunification” of Taiwan, so the China-Taiwan war seems inevitable in the near future.
Technological experts claim that the United States and China will need to discuss the avenues of mutual growth in the semiconductors industry in order to maintain stability in the sector. For this, the United States will not need to corner China on the Taiwan issue by sending its lawmakers to the island, as it will only aggravate the crisis.