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Tuesday, 21 July 2020 09:47

Any Taiwan move by China would hit US tech sector hard: report Featured

Any Taiwan move by China would hit US tech sector hard: report Pixabay

There have been many discussions centred around the possibility that China may try to retake Taiwan and speculation as to the likely American reaction, but hardly any consideration has been given to the fact that even a failed bid by Beijing would have a massive effect on the American reliance on Taiwan's semiconductor manufacturers.

The newspaper Asia Times quoted David Arase, professor of international politics at the Hopkins-Nanjing Center of the Johns Hopkins University School of Advanced International Studies, as saying: “Even an unsuccessful invasion of Taiwan would cause a supply chain disruption.”

The Taiwan Semiconductor Manufacturing Company, the world's biggest and most advanced foundry, processes devices designed by AMD, Apple, Broadcom, Nvidia, Qualcomm, Xilinx, Texas Instruments and other American companies, by Japanese semiconductor makers Renesas and Sony and also by European companies NXP and ARM (owned by Japan’s Softbank).

Thus there was plenty of scope for disruption should China decide to embark on an adventure, Asia Times said. The seven American companies alone provided nearly 55% of TSMC's revenue. And only Texas Instruments had a fabrication unit.

If Taiwan was taken over by China, all TSMC customer designs would be compromised and their production schedules would be badly affected, it said.

The newspaper pointed out that there were not that many backup options. Samsung's foundry business was less than 40% the size of TSMC, while third-ranked Global Foundries was less than 20%. And the fourth and fifth ranked options, UMC and SMIC, were Taiwanese and Chinese respectively.

While the Americans could expand semiconductor production capacity, that was a long and expensive process, the newspaper said. The US only had about 13% of global capacity and less than 10% investment in new capacity, but American companies accounted for 47% of semiconductor sales in 2019.

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Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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