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Global Economy

The world economy also depends on Taiwan

Hardly anything works in everyday life without semiconductors. They are built into smartphones, computers, cars and medical devices, for example – and most of them come from Taiwan. According to a study by market researchers from Trendforce, 64 percent of the world's contract manufacturing of semiconductors was carried out by companies from Taiwan last year.

And there are significantly more factories in Taiwan than, for example, in the big competitors China, South Korea or the USA. The Southeast Asian country is also home to the world's third largest semiconductor manufacturer, Taiwan Semiconductor Manufacturing (TSMC). The group not only produces chips for Apple, Qualcomm and AMD, but also German car companies such as Audi, VW and Ford are among the customer base.

Chip shortage with far-reaching consequences

During the pandemic, it was already impressive how dependent the western countries are on Taiwanese industry: Because of supply and delivery bottlenecks, some of the semiconductors could not be delivered. As a result, production in some EU countries had to be cut back by a third because the important computer chips were in short supply.

Tensions between the US and China over a possible visit by US leader Nancy Pelosi to Taipei are raising concerns that the China-Taiwan conflict could escalate. This could have similar dramatic consequences for the global economy as the delivery bottlenecks in the pandemic.

Western countries want to become more independent

However, many Western countries have long since begun to boost their own chip production: last week the US Senate passed a law to promote semiconductor production. The declared goal of US President Joe Biden is to strengthen competitiveness vis-à-vis China and other countries. The law will lower prices, create jobs "and – most importantly – reduce our dependence on imported chips," Biden said recently.

There are also similar efforts in the EU – with the so-called "Chips Act". In order to establish production sites in Europe in the medium term, the EU Commission wants to raise a total of more than 43 billion euros in public and private money by 2030, according to a decision made in February. Of this, around 15 billion are new issues as part of the chip program, half of which come from the EU and half from the member states.

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