The global supply of semiconductors at risk
The current state of relations between China and Taiwan is at tenterhooks which may put the global supply of semiconductors at risk. One Taiwanese company, Taiwan Semiconductor Manufacturing Company (TSMC) provides 90% of all advanced-design chips, and Taiwan as a country produces 60% of all types of semiconductor products making it the biggest producer by far. Its closest competitors are Samsung at (18%) and Intel at (10%) a distant second and third.
The recent fears concern the ongoing Chinese posture on Taiwan, which it claims is part of its territory and could choose to invade the island nation at any time, taking leaf from the book of the Russia-Ukraine. This is evident by the two-day military drill surrounding Taiwan after its recent elections. As part of the drills, dozens of Chinese fighter jets carrying live ammunition conducted mock strikes against “high-value military targets” of the “enemy” alongside destroyers, frigates and missile speedboats, according to China’s state broadcaster CCTV.
In light of the fact that 50% of all containerships in the world move through the Taiwan Strait, this makes it the centre of maritime trade. Any interruptions thereof could be catastrophic to global supply chain and world economics. And let’s not be quick to forget the chips shortage of 2021, which forced the automotive industry to cut back on production by 7 million units, resulting in the loss of billions of dollars of revenue. This was a “temporary” situation and if war breaks out, who will tell how long it may last. Again à la Russia-Ukraine.
The global semiconductor market size was valued at USD 611.35 billion in 2023 and is projected to grow from USD 681.05 billion in 2024 to USD 2062.59 billion by 2032, exhibiting a CAGR of 14.9% during the forecast period (2024-2032). Majority of the world's electronics - from phones to electric cars - are powered by computer chips made in Taiwan.
Semiconductors are essential electronic circuits which are integral to electronic devices and systems composed of components such as memory devices, logic devices, analog integrated circuits, memory protection units, microcontroller units, discrete power devices, and others. Basically everything we use today. And as more of the world get digitised and new development like artificial intelligence (AI), the Internet of Things (IoT), and machine learning (ML) technologies, this further supports the market growth, disruption can spell disaster for life as we know it.
Countries must now find ways to reduce their reliance on Taiwan for the production of semiconductors. In a bit to grow its marke
t share, Samsung Electronics announced in March 2023, plans to invest USD 230 billion as a part of the South Korean National Project over the next 20 years to build the world’s largest semiconductor manufacturing base near Seoul. This may be the beginnings of a solution but in the short term we all cross fingers that cool heads prevail.
The current state of relations between China and Taiwan is at tenterhooks which may put the global supply of semiconductors at risk. One Taiwanese company, Taiwan Semiconductor Manufacturing Company (TSMC) provides 90% of all advanced-design chips, and Taiwan as a country produces 60% of all types of semiconductor products making it the biggest producer by far. Its closest competitors are Samsung at (18%) and Intel at (10%) a distant second and third.
The recent fears concern the ongoing Chinese posture on Taiwan, which it claims is part of its territory and could choose to invade the island nation at any time, taking leaf from the book of the Russia-Ukraine. This is evident by the two-day military drill surrounding Taiwan after its recent elections. As part of the drills, dozens of Chinese fighter jets carrying live ammunition conducted mock strikes against “high-value military targets” of the “enemy” alongside destroyers, frigates and missile speedboats, according to China’s state broadcaster CCTV.
In light of the fact that 50% of all containerships in the world move through the Taiwan Strait, this makes it the centre of maritime trade. Any interruptions thereof could be catastrophic to global supply chain and world economics. And let’s not be quick to forget the chips shortage of 2021, which forced the automotive industry to cut back on production by 7 million units, resulting in the loss of billions of dollars of revenue. This was a “temporary” situation and if war breaks out, who will tell how long it may last. Again à la Russia-Ukraine.
The global semiconductor market size was valued at USD 611.35 billion in 2023 and is projected to grow from USD 681.05 billion in 2024 to USD 2062.59 billion by 2032, exhibiting a CAGR of 14.9% during the forecast period (2024-2032). Majority of the world's electronics - from phones to electric cars - are powered by computer chips made in Taiwan.
Semiconductors are essential electronic circuits which are integral to electronic devices and systems composed of components such as memory devices, logic devices, analog integrated circuits, memory protection units, microcontroller units, discrete power devices, and others. Basically everything we use today. And as more of the world get digitised and new development like artificial intelligence (AI), the Internet of Things (IoT), and machine learning (ML) technologies, this further supports the market growth, disruption can spell disaster for life as we know it.
Countries must now find ways to reduce their reliance on Taiwan for the production of semiconductors. In a bit to grow its marke
t share, Samsung Electronics announced in March 2023, plans to invest USD 230 billion as a part of the South Korean National Project over the next 20 years to build the world’s largest semiconductor manufacturing base near Seoul. This may be the beginnings of a solution but in the short term we all cross fingers that cool heads prevail.
