With geopolitical tensions surrounding Taiwan, concerns are mounting that the global semiconductor shortage could widen. The island nation plays a central role in the global chip industry through manufacturer TSMC. “Thanks to TSMC, Taiwan is by far the most important country for so-called cutting-edge chips, ie the most modern semiconductors currently available on the world market,” said Julia Hess, an expert at the “Foundation New Responsibility” think tank.
Hess estimates Taiwan’s market share in this area at 90 percent. The modern semiconductor products are used, for example, in mobile phones and computers, but also in the field of artificial intelligence or autonomous driving, according to the expert in the field of “Technology and Geopolitics” of the German foundation. In addition, Taiwan also produces larger chips, such as those used in the automotive sector or in industry. Taking all categories of semiconductors together, Taiwan produces every second chip in the world.
Failure would be hard to compensate
If China were to block Taiwan or at least disrupt supply chains, it would be very difficult to offset the loss, especially in the advanced area. After the market for state-of-the-art chips had been strongly consolidated in recent years, Samsung now has only one competitor besides TSMC, says Hess. Unlike TSMC, the South Koreans would mainly produce their own chips, so there would be hardly any capacity available for contract manufacturing.
For semiconductors used in automotive or industrial applications, things look slightly better. There are certainly producers in Europe and the US that could offset any bottlenecks. “Yet you would notice, as we saw with the shortages of 2020,” warned the semiconductor expert.
Mutual Dependencies
There is no quick fix to the problem. “It will take several years to expand capacity,” Hess says. In addition, there are often interdependencies: the Taiwanese chip industry in turn depends on Europe and Japan for equipment and chemicals and on the US for software.
Moreover, only some of the semiconductors are standardized. Many chips are made specifically for a customer or a finished product, making it difficult to split or store them across multiple chip manufacturers.
Many specialists, hardly any generalists
According to Hess, specialization and monopolization have increased in recent years. There are fewer and fewer chip makers, like Samsung or Intel, taking over all areas from design to manufacturing to marketing the chips (so-called Integrated Device Manufacturers, IDMs), “because the companies have just noticed that if they want to keep this pressure to innovate and wants to somehow sustain it economically, so it only makes sense to focus on one type of machine, on one production step,” says Hess.
Infineon observes geopolitical tensions with “great concern”
The German chip group Infineon, which also operates in Austria, was said to manufacture 70 percent of its products itself. “We outsource other products to different contract manufacturers worldwide” – but Infineon wouldn’t say which contract manufacturers they work with. Infineon said in a statement that rising geopolitical tensions are “fundamental”.
Source: Krone
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
