Semiconductors in Taiwan: The US – China 'Chip War'

Gabriela Lozano

Found in your everyday household fridges to cruise missiles, the semiconductor, as stated by the economist, is “the cornerstone of the modern economy” (The Economist, 2022)

First off, what are semiconductors? Why are two of the great world powers fighting over them? Semiconductors, integrated circuits, and microchips are all names for the essential component comprised of silicon or germanium that conducts a regulated amount of electricity for electronic devices

Taiwan is the global leader in semiconductor manufacturing and home to two of the world’s largest chipmakers, TSMC and UMC TSMC produced over 12,300 products for 535 clients worldwide in 2021, including A-series chips for Apple, the company's largest client (McFarlane, G 2023) With the semiconductor industry making up to 15% of Taiwan's total GDP, this market played a critical role in Taiwan's maintained growth rates even during times of pandemic (Kelter, F 2022) Nevertheless, the success in this industry has made it a target for the two rivalrous world powers of The People’s Republic of China and The United States of America.

They control and manage the flow of electric current in electronic equipment and devices. Found in smartphones, appliances, gaming software and more, semiconductors enable advances in communication, computing, healthcare, military systems, transportation, clean energy and countless applications. (SIA, 2023)

Producing around 60% of the world's semiconductors and over 90% of the most advanced ones, Taiwan has become a ground of instability from the conflicting interests of the US and China rooted in the strategic and economic race of both parties involved (The Economist 2022)

(The Diplomat, 2023) In addition to this, they also rolled out a set of restrictions that diverge the sale of advanced chips to China, depriving China of the computing power it needs in order to advance its AI industry to scale This resulted in China increasing supply chain security to its highest priority

$52.7 billion industrial policy aiming to strengthen research, enhance supply chain resiliency, and revitalize semiconductor production in the United States capacity (Al Jazeera, 2022) them to provide defense, tensions are high on a geopolitical scale and the semiconductor clash adds to the flames. Yet, the US’s continued suppression of China could lead to trouble for the manufacturing sector as the Republic is a leading exporter to the rest of the world, including the US. China’s role in the manufacturing chain is irreplaceable presently due to the scale and capacity of Chinese manufacturing, meaning separating China from the semiconductor supply chain is near to impossible (Global Times, 2022)

Ultimately, the semiconductor industry which fuels Taiwan’s engine is being pursued by the two giants that are China and the USA. Amidst geopolitical conflicts in the technological industry and fuelling tensions that have been growing over the years, Taiwan remains in an unpredictable and unstable position, with its main source of protection being its “silicon shield”

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SIA (2023) “Semiconductors https://www semiconductors org/semi is-a-semiconductor/

McFarlane, G (2023) “How T Manufacturing Company Makes

From:https://www.investopedia.com/a /how-taiwan-semiconductor-manufact tsm.asp

The Diplomat (2023) “The future war.” From: https://thediplomat.com the-china-us-chip-war/

Kelter, F. (2022) “The Battle Ov Endangering Taiwan” Foreig https://foreignpolicy.com/2022/11/09/t semiconductors-water-resource-scarci

Cheng, E. (2022) CHINA ECONOMY biggest chipmaker more than th CNBC From:https://www cnbc com/2 taiwans-biggest-chipmaker-more-than around.html

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Brown, D (2023, April 6th) “China simple guide.” BBC From: https://ww asia-china-59900139