What do a toaster, an iPhone and the latest Playstation have in common? We find in these three objects of our daily life semiconductors. These small silicon chips are used absolutely everywhere: in our computers, in household appliances, in our smartphones and even in medical equipment. And they very often come from Taiwan.
Following Nancy Pelosi’s visit, the Chinese military maneuvers were the largest ever around Taiwan. They were intended to train for a “blockade” of the island, according to Chinese official media. If ever this blockade were implemented, what would be the consequences of isolating the island?
An essential role
Taiwan has an essential role in the field of semiconductors: the island has developed a powerful “foundry” industry. They provide 40% of the components used worldwide. The Taiwan Semiconductor Manufacturing Company (TSMC), unknown to the general public, produces the most advanced chips. «Apple’s main supplier of semiconductor chips » dominates almost half of the world market, underlines François Bus, former engineer of Texas Instrument and author of the book At the time when fleas made their laws (1).
In the field of semiconductors, the market is booming. For 2022, “the expected growth of the sector is 15%” analyzes the Cyclope report. In the telecommunications sector, 5th and 6th generation networks (5G and 6G) are particularly heavy on semiconductors. Likewise, the electrification of vehicles, the digitization of industrial machinery and the development of artificial intelligence are increasing demand. These chips have now become indispensable.
A halt in deliveries can therefore have serious consequences. The pandemic has shown this. It has led to delays and shortages that have caused many factories in the automotive sector to stop all over the world.
Competition not yet at the level
China’s aims could therefore continue to disrupt an already imbalanced market. TSMC boss Mark Liu has previously argued that a Chinese invasion would make « inoperative » company channels. “No one can control TSMC by force”he warned in an interview on CNN, implying that the company had planned to sabotage the production tool in case the island was invaded.
«Manufacturing processes are becoming more and more complex,” explains François Bus. “And the Chinese don’t have access to advanced technologies for manufacturing yet, they need Taiwanese chips for their own products,” he adds.
The Europeans and the United States are just beginning to invest several tens of billions of euros in the production of these famous chips, but for the moment remain dependent on Taiwanese components. “Rebuilding a complete industrial sector would have a cost beyond the investment capacities of developed countries”, estimate the Cyclops Report.
A route taken by half of the world’s traffic
The island also plays an important role for global maritime traffic. The Taiwan Strait, 130 to 180 km wide, separates mainland China from the island. This route is taken by half of the world’s traffic. For the year 2022 alone, the strait has already been used by 88% of the largest container ships in the world.
The strait connects factories in East Asia to the rest of the world. It also allows the transport of natural gas and oil. Delays in delivery could accentuate the already existing tensions on the price of energy. Closing the strait would force ships to detour to the east of the country, which would not only take longer but also be more dangerous, as the area is more susceptible to seasonal typhoons.