Chip crisis: Taiwan’s centrality in the US-China tug-of-war

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After decades of silent service, microchips are increasingly in the spotlight: the request increasing and the crisis world are contributing to redefine the world order of production of these small central elements for more and more industrial sectors.

Their shortage has in fact affected the car manufacturing sector, and continues to slow down the production and therefore the delivery of many other artifacts. Suffice it to say that low-cost devices such as the Raspberry Pi Zero which should cost around 30 euros from the price list are found online at over four times the cost and always in small quantities. Distributors say the availability of these small computers is nearly a year, and this is just one example.

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Given the role that Taiwan plays in semiconductor manufacturing on the global market it is no coincidence that the island is at the center of one international crisis between China and the United States. If the island’s geographic location were sufficiently distant from Europe not to raise concerns about a possible war conflict, the effects on the global chip market would be devastating.

The growing demand for chips from world economies makes Taiwan a nerve center and the economic advantage linked to greater availability a sufficiently relevant aspect to fuel the dialogue with the United States and consequently the frictions with China which considers the island as part of its territory and therefore the policy on the sectors local industrialists. Taiwan’s willingness to maintain its independence and local companies to avoid being paralyzed by any conflict has prompted local companies such as TSMC and MediaTek to open manufacturing sites in the United States and Japan and to initiate joint research on microchip design with American universities such as Purdue University.

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The centrality of Taiwan

Beijing’s dependence on Taiwanese microchips is not just a matter of strategic interest, but also a deterrent for military actions against Taiwan to avoid repercussions in the national production system. The strengthening of relations with America can, however, unbalance the valuations, especially if Beijing wants to prevent the technologies from being sold to the United States.


To understand the strategic importance in the sector, just think that China in 2021 imported semiconductors for 430 billion dollars, more than oil imports, of which 36% came from Taiwan. It is therefore unlikely that the island will become completely independent from Beijing and should the tone of the clash further intensify military conflict could become the only option for securing the supply of these small pieces of silicon on which all industrial sectors now depend.

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For similar reasons the United States is intensifying relations and also supporting economically companies such as TSMC, as long as they do not expand their installations in Chinese territory. The Taiwanese government has also been open to a potential alliance of four to harmonize the chip production chains of America, Taiwan, South Korea, and Japan.

While waiting for the effects of the Chips Act European and American make themselves heard it is to be expected that chip supply problems will continue to be felt. Decision makers they will therefore have to make plans that take into account delays, reduced volumes in availability and the inevitable delays in deliveries. The decision to print National Health Cards (CNS) without chips due to the difficulty in finding them is news these days. This is a change with limited impact if not in some sectors thanks to the availability of SPID and CIE as alternative digital identification mechanisms.

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All that remains is to wait the developments of the crisisbeing aware that the news regarding visits by leading US government officials to Taiwan are not only related to the need for the United States to maintain influence in the area but also to the need to support a world economy based on semiconductors. Definitely the inflation growth combined with the scarcity in the market it will have an impact in sectors such as the IoT where convenience is also linked to the low cost of microchips which makes it possible to install them in large volumes. The use of passive technologies, such as i QR codesfor the construction of bridges between the real world and the digital universe can be a valid alternative at least until the situation normalizes again.


The article is in Italian

Tags: Chip crisis Taiwans centrality USChina tugofwar

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