China-Taiwan War Could Worsen Global Semiconductor Shortage

A shooting war between China and Taiwan would have a massive knock-on effect on the world's economy since Taiwan manufactures roughly 50% of the world’s semiconductors, Chris Young reported for Interesting Engineering.

Photo Insert: China is dependent on Taiwan for microelectronics, and this explains why it cannot impose a ban on electronics imports from the island it considers a renegade province.

Despite its bluster and daily saber-rattling, China is dependent on Taiwan for microelectronics, and this explains why it cannot impose a ban on electronics imports from the island it considers a renegade province.

What Beijing imposed was a ban on the import of horse mackerel and some fruits, whose value is far removed from China’s annual imports of microprocessors valued at $400 billion.

To save face after US House of Representatives Speaker Nancy Pelosi ignored China’s demand that she cancel her visit to Taiwan, 68 warplanes and 10 warships crossed the median of the Taiwan Strait and Beijing sent five missiles that passed through a sliver of sky above Taiwan.

It wasn’t much of a threat to Pelosi as a US aircraft carrier and dozens of warships were sailing near Taiwan.

“While the loss of life would clearly be the worst consequence if conflict were to break out, the heightened tensions also highlight the world's incredible reliance on Taiwan for semiconductors. It's an issue that's especially prescient given the ongoing global impact of Russia's invasion of Ukraine — such as an impending gas crisis in Germany due to Russia's squeeze on gas supplies. The effects of the global chip shortage last year highlighted the world economy's reliance on Taiwan. The semiconductor shortage had massive knock-on effects for the auto industry, for example, forcing many large firms to halt production,” Young said.

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