Europe

Will tensions between China and Taiwan impact semiconductor production?


Overseas, China’s military maneuvers continue. In retaliation for the visit of the Speaker of the United States House of Representatives, Nancy Pelosi, to the island claimed by Beijing, the People’s Liberation Army deployed its military forces. Exercises which were to last until Sunday.

If a real conflict happened to break out between Taiwan and China, this could have economic consequences in Europe. Taiwan is indeed the first producer of semiconductors in the world, these small electronic components which one finds in practically all our apparatuses.

Semiconductor supply could be impacted

If the situation around Taiwan were to last or deteriorate, the supply of semiconductors would be strongly impacted. The Taiwanese company TSMC is indeed the first producer in the world of these electronic chips, it supplies the automobile, IT, telephony or even air transport, a giant which represents 50% of the world market.

Beijing is therefore particularly interested in this factory. TSMC CEO Mark Liu explained to CNN earlier this week his fear of an invasion by China. “No one can control TSMC by force. If military force is used or there is an invasion, then you render TSMC’s facilities inoperative,” he said.

In the event of an invasion, China would therefore not control the production of these chips, since this production would be interrupted or destroyed, plunging into uncertainty most of the world’s technology industries, which depend on them today.

Europe invests 43 billion euros

With Beijing’s military exercises in the Taiwan Strait, the immediate concern for TSMC is the risk of the military blocking container ships leaving the island, avoiding companies in need of receiving their semi- drivers. To deal with these various crises, Europe is going to invest 43 billion euros over the next few years. The objective: to quadruple its production of chips by the end of the decade, in order to no longer depend on these producing countries.

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