The visit of US House Speaker Nancy Pelosi to Taiwan last week has reignited the trade war between China and the United States. This is because the territory, which wants greater autonomy in relation to the Chinese, is also strategic for the technological development of the two powers.
Taiwan is home to the world's largest chip maker: Taiwan Semiconductor Manufacturing Company (TSMC). Semiconductors are essential components in electronic devices, from cars to smartphones. They act as the data processing brains for these products.
Right now, China is encircling the island of Taiwan and maintaining imminent war tension. And if that happens, all these factories could stop and reduce that production considerably.
The shortage of chips on the market has greatly increased due to the effects of the Covid pandemic, and the conflict between the two territories could affect the entire world electronics chain – which includes production, transport, cost and consumption.
TSMC, in particular, produces chips for the most diverse companies in the world – from Apple to the American military industry. Taiwanese control more than 90% of the market share of advanced processors.
In 2020, China accounted for 60% of the world's demand for semiconductors – that is, more than half of the world's chips – and only produced 13% of the supply. Chip sales reached USD 440 billion worldwide in 2020. But during the pandemic, the sector was hit by severe shortages – especially in the production of less complex, less profitable semiconductors, which impacted several economic sectors.
In addition to TSMC, Taiwan is also home to the world's largest electronics manufacturer (Foxconn) and the world's largest notebook manufacturer (Quanta Computer), which caters from Apple to Dell. That's why the New York Times calls Taiwan “most important place in the world”.
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WHAT ARE SEMICONDUCTORS
They are chips made of silicon extracted from sand. The raw material goes through a purification process that results in blades with an appearance similar to glass, but they are not transparent. These blades are called wafers and go through a long chain of processes in which the structure of the chips is built according to the design defined by fabless.
For example, the GPS present in agricultural machines work through semiconductors. Cars also need technology to be produced, as well as electronics, household appliances and smartphones. 🇧🇷The entire command and all the safety of an airplane is based on chips.".
O SIA's 2021 report (Semiconductor Industry Association) on the market showed that in 2020, the computer industry bought $142 billion worth of semiconductors. Smartphone companies spent $137,6 billion acquiring the chips. The automotive sector, on the other hand, consumed US$ 50,1 billion with the technology.
China and Taiwan have a complex relationship. The island has been governed independently since 1949, but Beijing considers it part of its territory and a breakaway province. Since 1971 the territory has been recognized by the UN General Assembly as part of China.
