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Taiwan Claims Peace Is Critical to Semiconductor Supply Chain

Peace, however fragile it may be, is needed for the semiconductor supply chain to remain unbroken, according to Taiwan.

Credit: Chris Ratcliffe/Bloomberg via Getty Images

Taiwan's Minister of Economic Affairs, Wang Mei-Hua, recently told Bloomberg News that the global community should take Taiwan's security more seriously to provide "stable service" while also being a good partner to everyone in a bid for political support.

This effort from the Taiwanese Minister follows a recent incident wherein a total of 52 Chinese fighter jets flew close to the country in China's largest show of force towards Taiwan. The Taiwanese Defense Ministry said that these fighter jets consist of 38 J-16 fighter jets, 12 H-6 bombers, two SU-30 fighters, two Y-8 anti-submarine warfare planes and two KJ-500 airborne early warning and control planes.

The move sparked concern in the U.S. State Department, calling the show of force and its previous occurrences "destabilizing, risks miscalculations and undermines regional peace and stability".

"We urge Beijing to cease its military, diplomatic and economic pressure and coercion against Taiwan," the U.S. State Department added.

TMSC's Fabrication Plant 16 in Nanjing, China. Credit: Taiwan Semiconductor Manufacturing Co., Ltd.

Taiwan is home to the Taiwan Semiconductor Manufacturing Co., which boasts a 53 percent share of the contract chip market. As such, any instability in the Taiwan Strait could negatively affect or even cut off the supply of semiconductors used by various companies in different parts of the globe. The instabilities would also harm the ability of numerous countries, such as Japan, the European Union and even the U.S. and China, to become self-sufficient in terms of semiconductor production.

You may remember that Bain and Co.'s 2021 technology report stated that while the trend of various countries becoming independent from the semiconductor manufacturers of the Far East is irreversible, it will take some time for it to happen, which means that any instability within this period of time could set back self-sufficiency efforts.

However, Wang told Bloomberg that companies worldwide are not too dependent on Taiwan for their semiconductors, citing that they too require equipment and materials from other countries to maintain the semiconductor supply chain. One of these materials is sourced from the Netherland's ASML Holding NV, which single-handedly produces extreme ultraviolet lithography systems required to manufacture cutting-edge chips.

Minister Wang Mei-Hua Credit: Taiwan Ministry of Economic Affairs

"Taiwan has built a professional and reliable ecosystem over a long period of time, so many designers end up getting Taiwan to make the chips," Wang said. "It is really because Taiwan has a very efficient production system. Taiwan actually grows and thrives together with global equipment and material suppliers."

The TSMC was previously reported to be studying the feasibility of establishing a semiconductor factory in Germany and considering building one in Japan to help alleviate the effects of the global semiconductor shortage. The company is also building a US$12 billion plant in Arizona, Texas, to start producing chips by 2024.


Written by John Paul Joaquin


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