The Taiwan Strait is vital to global supply chains © SAM YEH/AFP via Getty Images
The Taiwan Strait is vital to global supply chains © SAM YEH/AFP via Getty Images

How the US and Taiwan plan to safeguard chip supply

17 August 2022

Taiwan president Tsai Ing-wen has described the stability of the strait between her country and China as vital to the global supply chain of high-tech products.

The comments followed a second visit to the island by a US delegation, this time led by senator Ed Markey, chairman of the US Senate Foreign Relations Subcommittee, close on the heels of House speaker Nancy Pelosi’s controversial visit.

Tsai said in a speech during the visit that she hoped to continue strengthening cooperation with the US and develop more secure global supply chains.

She later told reporters that peace and stability in the Taiwan Strait, the 180-kilometre wide body of water that separates Taiwan and the rest of Asia, was vital to supply chains across the world.

And she welcomed the CHIPS Act in the US – a $52bn package to reshore chipmaking in the US. Subsidies as a result of the Act are likely to benefit TSMC, the world’s leading contract chipmaker, which is already planning to build a $12bn chip factory in Arizona.

“Taiwan has developed a strong semiconductor industry over the years and we are pleased to see this industry investing heavily in the US,” Tsai said.

“We were delighted to see bipartisan support for the passage of the CHIPS and Science Act. We believe the act provides even more incentives for Taiwanese semiconductor companies to explore investments in the US.”

Recent data published by the US Semiconductor Industry Association lobby group estimates that Taiwan supplies about 90% of high-end semiconductor chip demand worldwide.

Earlier this month, John Manners-Bell, chief executive of market research firm Transport Intelligence and founder of the Foundation for Future Supply Chain, told Supply Management Pelosi’s visit would “really ratchet up tensions” in the region.

He urged procurement teams to ensure they are looking into alternative sources of supply. “It’s going to have a real impact on supply chains,” he said.

“There is certainly a threat there, and it would be ridiculous if western politicians and western manufacturers weren't actually cognisant of that and weren't flexing their supply chains to take that into account. China is sending a very clear message, and that could result in more disruptions in supply chains.” 

Meanwhile, China’s tech industry is seeing further supply chains snarl-ups due to a heatwave disrupting operations at laptop component makers and assemblers in Sichuan province and Chongqing, according to The Register.

Closures came about after the Department of Economy and Information Technology of Sichuan prioritised residents' access to electricity when temperatures hit 38C, the technology news site reported.

The government tightened measures on power usage for industrial users during 15-20 August in 19 cities.

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