Expansion Into U.S. Market
As the war between China and U.S. semiconductor technology rages on, Taiwan has allied to expand its presence in the U.S. According to the National Bureau of Asian Research, “The success of the U.S. semiconductor supply chain strategy hinges on whether the United States can harmonize subsidy and export control policies with its partners in the nascent “CHIP 4” initiative—Japan, South Korea, and Taiwan. Key variables, however, have received insufficient attention in Washington. Andrew Grotto, Troy Stangarone, and Emily Weinstein outline ally perspectives, assess the costs and risks of U.S. actions, and offer recommendations for Congress to harmonize economic security policies among U.S. allies.”
Taiwan Plays Crucial Role in Chip Supply Chain
Because Taiwan has been bolstering its semiconductor industry for over 40 years, the Taiwan government and foreign and domestic companies have heavily invested in the sector. The dominant semiconductor ecosystem fuels a wide variety of technologies.
The Diplomat explains, “Taiwan is a crucial supplier and partner not only for leading U.S. technology firms like Apple, Nvidia, Texas Instruments, and Qualcomm but also for prominent technology companies across the globe. Four Taiwan companies – TSMC, UMC, Vanguard, and Powerchip – held a foundry market share of 69 percent in the first quarter of 2023. Spearheaded by TSMC, Taiwan foundry companies account for most overall global capacity, especially for leading-edge technology at the smallest process nodes and 300-mm wafers.” What does this mean for the chip war between China and the U.S.? The U.S. has a new partner in the semiconductor supply chain.
U.S. and Taiwan in the Semiconductor Supply Chain
Taiwan’s cutting-edge chips have contributed to the development of appliances, smart devices, and cars–to mention a few. As the second largest destination for semiconductor equipment, Taiwan is the premier place for capacity and know-how for the future of the semiconductor supply chain–especially partnered with the U.S.
U.S. tech companies will only soar to new heights as a critical partner. Due to the intricacy of the semiconductor industry and the mighty cost of building new production capacity, it would be unfeasible to replace Tawain-made chips. Whether over a few years or overnight, it’s virtually impossible.
Also, if the U.S. were to lose access to Taiwan-made chips, the hit would be almost equivalent to the COVID-19 pandemic’s negative impact on the U.S. economy. The Diplomat puts this into perspective, “U.S. intelligence estimates show that losing Taiwan’s chip production could mean erasing up to $1 trillion per year from the global economy for the first few years. It could also severely affect U.S. national security, as access to semiconductors is a key driver for advanced weapons capabilities.”
Chips are the driving force, the brains of the modern economy, from iPhones, toasters, washing machines, refrigerators, computers, and credit cards. Not to mention, a new car could use upwards of 1,000 chips. With artificial intelligence rising, chips will only be in higher demand. Need a chip supplier? Shop Pacific Component Xchange. We’ve got you covered, from sensors to integrated circuits, passive components, and discreet semiconductors.