Taiwan, amid an increasingly heated conflict with Beijing, completely dominates the global market for computer chips.
Many analysts point to the world’s leading chip industry in Taiwan as one of the factors in the conflict with China.
China has recently dramatically increased pressure on the autonomous island. Chinese military aircraft are becoming more and more challenging. In a speech on Saturday, Chinese President Xi Jinping promised that reunification with Taiwan “will and will be done.”
At the same time, the West’s interest in Taiwan is also great. The United States has supported the authorities militarily for a long time. The Wall Street Journal revealed last week that a score of US Navy soldiers were sent to the island to train ground forces.
The Chinese pressure greatly worries the Taiwanese authorities and the defense is alert.
“The situation now is the darkest since I entered military service more than 40 years ago,” Taiwanese Defense Minister Chiu Kuo-cheng told the island’s legislature on Wednesday, according to AFP.
Taiwan has never formally declared its independence from China. The two parties have lived separately since the Communists won the Chinese Civil War in 1949.
Over the years, a thriving technological environment has developed on the island, which is otherwise poor in natural resources. The specialty of the Taiwanese industry is the extremely demanding production of the most complex computer chips.
The world economy is completely dependent on computer chips. They are critically important components in virtually every industry: energy, healthcare, consumer electronics, manufacturing, defense, and transportation, to name a few.
The value of production in Taiwan was in 2020 was according to Taiwan News 3.2 trillion Taiwanese dollars. The sum corresponds to just under NOK 1 billion.
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The growth over the previous year was up to 20.9 percent. Taiwanese research center ITRI expects 8.6 percent growth in 2021.
America’s share is falling
The shortage of computer chips that has emerged in the wake of the pandemic has put serious attention on the global dependence on Taiwanese suppliers. Taiwan Semiconductor Manufacturing Company (TSMC) is in a special position.
The actual design of parts is often done in other countries, the United States is among the market leaders here. But when it comes to producing ultra-advanced chips, companies like Apple, AMD, Nvidia, and Broadcom are turning to Taiwan.
in a relationship Released by the White House in June, it states that the United States does not produce any of the most advanced chips on its own keel. They are usually main processors for use in computers and mobile phones.
In this category, the so-called 10 nanometer or less technology, Taiwanese manufacturers have 92 percent of the market.
America’s share of the overall computer chip market has fallen from 37 percent in 1990 to 12 percent today. Without a strategy to reverse the trend, participation will fall further, the US report claims.
In 2020, chipmakers in Taiwan accounted for more than 60 percent of the industry’s global sales, according to figures from research firm TrendForce, cited by CNBC. The Taipei-based company estimates that TSMC alone has 54 percent of the global market.
Another major producing country is South Korea, where Samsung is the largest manufacturer.
Manufacturers in other countries have become smaller players in the market over time, although many want a greater degree of self-sufficiency. It has become increasingly demanding and expensive to keep up, with the market winners taking the majority of global sales.
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China can’t keep up, either.
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Semiconductor Manufacturing International Corporation (SMIC) is the largest Chinese player, and TrendForce figures show that the company is the world’s fifth-largest computer chip maker, in terms of turnover, behind TSMC, Taiwan UMC, Samsung, and US GlobalFoundries. .
However, the Chinese company is struggling to acquire the technology it needs to compete at the real top tier. In 2020, the administration of President Donald Trump put the company on a blacklist that prevents it from buying major equipment from the United States.
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The US government, according to Reuters He also lobbied the Dutch authorities to stop the sale of advanced equipment to SMIC. The campaign is said to have started in 2018, after Dutch company ASML got the green light to sell equipment to China. The company produces machines for so-called nanolithography, a central part of the computer chip production process.
The sale is said to have stopped after high-level US government officials raised the matter with Prime Minister Mark Rutte.
But even if SMIC gets the equipment they want, analysts believe they have a long way to go before they can seriously compete with companies like TSMC and Samsung, which have the best technology.
“It will be years before the company can produce high-end computer chips in large quantities,” Paul Triolo of consultancy Eurasia Group told CNBC earlier this year.
Therefore, most indications are that Taiwan’s dominance in the critically important sector will continue for the foreseeable future.
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The big question is what will happen if China tries to secure military control of Taiwan.
TSMC President Mark Liu took the magazine by mouth and mentioned the fear of war in an unusually blunt way in July. Said according to Reuters that the pandemic has been devastating enough in the first place, and that no country wants more instability around Taiwan.
When it comes to a Chinese invasion, I would say that everyone wants peace in the Taiwan Strait. The reason is that all countries benefit from it, but also because of the supply chains for the semiconductor industry in Taiwan: no one wants to bother them, Liu said.