Taiwan's Semiconductor Shortage: Origins and Geopolitical Future

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Taiwan's Semiconductor Shortage: Origins and Geopolitical Future

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Themes

Taiwan, semiconductor, semiconductor shortage, COVID-19, climate change, TSMC Taiwan Semiconductor Manufacturing Company, geopolitical rivalry, semiconductor supply chain, semiconductor production, semiconductor manufacturing, UPW Ultra-Pure Wate, technology rivalry, China, United States, conduction of electricity

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Abstract

Semiconductors have become a central factor in our 21st century. As technology is used in all fields of human activity, from refrigerators to laptops, from electric cars to artificial intelligence, and from solar panels to military weapons, the need for electronic chips has grown and the demand for them has increased. Taiwan has been the world leader in semiconductors since the 1980s and 1990s, with its manufacturing company Taiwan Semiconductor Manufacturing Company (TSMC) accounting for 66% of the global market. However, in recent years, the semiconductor sector has had to face many obstacles. Between the COVID-19 pandemic, climate change and Sino-American geopolitical rivalries, the world is facing a shortage of these semiconductors. This situation has highlighted the weakness of the semiconductor supply chain, in which no country is independent. This shortage has made countries, especially the US and China, realize the importance and need for relative autonomy in semiconductor manufacturing.

What Is a Semiconductor?
Taiwan's Leadership
Origins of the Shortage: Between Pandemic and Climate Change
Sino-American Rivalry Around Semiconductors and Taiwan
Conclusion

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[...] The United States has a dominant position in the chip sector, not in the manufacture of chips but in the design and use of them. Indeed, the US accounts for more than 45% of total semiconductor revenues. The US has a dominant position in the intellectual property related to the design of the chips, the manufacture of the electronic devices used with the chips and the materials used for the wafers. This is why the US administration under Trump decided to impose export controls to prevent their intellectual property and essential chip-related equipment from falling into the hands of their great rival, China. [...]

[...] Semiconductors: shortages, tech leadership and geopolitics, OSTRUM Chu Ming-Chin Monique. Contrôler l'incontrôlable : La délocalisation de l'industrie Taiwanaise des semi-conducteurs vers la Chine et ses implications pour la sécurité. In: Perspectives chinoises, n° pp. 56-71. Geng Hwaiyu, Zhou Lin, How semiconductor chips are made, in Semiconductor manufacturing handbook, McGraw Hill Professional Kamasa Julian. Microchips: Small and Demanded, CSS Analyses in Security Policy, No December 2021 Max Chang, "Le commerce extérieur de Taiwan en 2019," Bureau Français de Taipei (Service économique) mars 2020 Nono-Womdim Julien. [...]

[...] An embargo of Taiwan would have many global economic repercussions as it would jeopardize the global supply chains of the technology industry. Mark Liu, President of TSMC, has said that if China fails to act on its factories, the company would make its industrial facilities "inoperable" rather than leave them in the hands of the Chinese Republic. In light of this, the US is trying to reduce its exposure to foreign semiconductor supply. Therefore, they are encouraging companies to relocate their factories to their home countries to solve the supply chain problem. [...]

[...] This Taiwanese situation tends to become a Technological Cold War between China and the United States.China does not rule out the use of armed force to integrate Taiwan. For the United States, which supports Taiwanese independence, the issue is more than just technological. It is a question of global credibility for the entire US-influenced alliance system. This factor would have strong repercussions on the international order. Regarding the semiconductor market, if China manages to take over the island, they could blockade the island. According to the US military, it is plausible that China could invade Taiwan before 2024, which is very close. [...]

[...] Moreover, in the face of climate change, states are trying to find new sources of energy, such as solar energy, which is being used more and more. In France, solar production covered of total electricity consumption (compared to 2.8% in 2020). Solar panels work with the help of photovoltaic cells, which in turn are powered by semiconductors. The shortage of electronic chips then prevents the progress of the energy transition and creates a delay, which is no longer possible to afford in the current climate situation. [...]

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