We live in difficult times. the deep period of instability in which the planet is submerged is having a very high human, social and economic cost. We are all witnessing it, and it is affecting us all to a greater or lesser extent, although there is no doubt that the people who are having the worst time are those who are being directly involved in the conflicts that are currently taking place.
The war in Ukraine is affecting us Europeans intensely due to its geographical proximity, its geostrategic implications, and also to the dependency relationship that some countries maintain with Russia from an energy and commercial point of view. However, it is not the only conflict with the scope necessary to have a profound global impact; the one that China and Taiwan have maintained for decades could further complicate the already delicate international situation.
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And it is that according to the US intelligence service, China plans to take advantage of the current climate of international instability to try to invade and gain control of Taiwan. In fact, according to The New York Times, the Administration led by Joe Biden is pressuring the Government of this country to acquire state-of-the-art US weapons that will allow it to defend itself against a possible sea attack by the Chinese army.
A war between China and Taiwan would put the chip industry in check
The CIA seems to have it very clear: the instability triggered by the invasion of Ukraine that Russia began on February 24 can be used by China to invade Taiwan in the coming years. The human cost of this conflict, if it were to occur, would be enormous, and, moreover, its impact on the global economy would be monumental because this Asian country occupies a central role in the technology industry in general, and in the semiconductor industry in particular.
In fact, two of the largest semiconductor manufacturers, TSMC and UMC, are Taiwanese. Both companies produce integrated circuits in other countries, but most of their manufacturing plants reside in Taiwan. TSMC alone, which is the largest semiconductor company on the planet, monopolizes according to Visual Capitalist approximately 54% of the market.
UMC settles for a much more restrained 7%, but it is also a significant figure that puts it in the same league as US company GlobalFoundries and China’s SMIC. The semiconductor deficit in which we have been mired since the pandemic began has shown us the huge dependency that some industries have, such as the automotive, computer, telecommunications or household appliances, among others, of chips.
Pat Gelsinger, the CEO of Intel, has predicted that the supply of semiconductors will not be able to match the demand for chips until 2024.
In fact, Pat Gelsinger, the CEO of Intel, and other experts predict that integrated circuit manufacturers will not be able to begin to balance the supply and demand of chips. until 2024. If a war breaks out between China and Taiwan before or after that date, in all probability TSMC and UMC will not come out unscathed. It is reasonable to anticipate that the supply of the raw materials they need from abroad would be interrupted as a result of the foreseeable isolation to which Taiwan would be subjected.
At this juncture it would be crucial for China to prevent the transport by sea and air of all kinds of raw materials and other products to and from Taiwan, and we should not overlook the fact that, unlike Ukraine, which is a mainland nation, this Asian country it only has island territory. This is the main reason why China would find it easier isolate taiwan of what it is costing Russia to restrict Ukraine, which has many more. And between all these companies they monopolize most of world production of integrated circuits. Let’s cross our fingers for sanity to prevail and soon leave behind this stage full of conflicts, tension and instability.
Images: TSMC
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