With 23.4 million inhabitants, Taiwan is among the most densely populated States and is the country with the most inhabitants and the most powerful economy among those that are not part of the United Nations.
Taiwan is a world superpower in semiconductor manufacturing with a market share reaching 63%, according to statistics provided by TrendForce. Semiconductors allow the passage of electric current or not, being especially used in the manufacture of electronic components that we find in all technological devices. Semiconductors are present in our mobile in a simple calculator, going through the television, the computer, a car, a solar panel or a wind turbine… Therefore, they are vital for the ecological transition.
Taiwan, South Korea and China account for 87% of the global microchip market, according to data from TrendForce. Taiwan’s TSMC, short for Taiwan Semiconductor Manufacturing Company, is the world’s largest chipmaker with a 54% market share, well ahead of the 17% of South Korea’s Samsung and 7% of Taiwan’s UMC.
TSMC is the major chip supplier for Apple, but also for other major US technology companies such as Alphabet-A, Qualcomm, NVIDIA or AMD. Mark Liu, president of TSMC, warned in an interview with CNN of the impact that a conflict between China and Taiwan would have on the technology industry. “The war has no winner. Everyone loses and the Taiwanese have earned their democratic system in Taiwan and want to be able to choose their way of life. If China invades Taiwan, the chip factories will not be able to operate,” he said.
Multi-million dollar investment plans
Currently, Asia is the place that concentrates the largest market share through these companies, but it is also the continent where these chips are produced thanks to subcontracting by these firms and the existing cheap workforce.
The United States has just approved the Law on Chips and Science, with an investment of 52,000 million dollars (about 51,200 million euros) with the aim that different companies cannot increase their production in China. The Asian giant has a similar program to boost its industry that reaches 150,000 million dollars.
US law bars chip companies from building factories or augmenting existing production lines in China for at least a decade. The restrictions affect both US companies such as Intel or GlobalFoundries, but also the Dutch ASML, TSMC or Samsung. In addition, the regulations also prohibit the development of the chip industry in Russia, although not those of 28 nanometers or earlier.
All countries have realized since the outbreak of the pandemic the importance of reinforcing national production of semiconductors, vital in the ecological transition and for the industry in general. In February, the European Commission presented a series of measures with which it aspires to mobilize up to 43,000 million euros in public and private investment -of which 30,000 million are provided for in the European budget and national plans-, with the aim of of the European Union a power in the production of semiconductors capable of covering 20% of world demand in 2030.
Brussels advocates adding 11,000 million euros in public and private investments from both the EU and third countries to promote research and development of the most advanced technology in community territory, pilot projects for the creation of prototypes and strengthen the European sector.
For now, Taiwan will continue to dominate the media spotlight due to China’s military maneuvers in the coming days and weeks. The market, for the moment, has not overreacted and discounts that the situation will not escalate, as it has happened in Ukraine.