Europe working on ‘Western’ supply chain network amid Taiwan tensions, analysts say
Europe should push for the creation of cooperative semiconductor supply chains with the help of Taiwanese chip-making oligopolies, as tensions between the island and China pose problems for the stability of supplies in Asian chips.
As the South China Morning Post first reported, Europe depends on integrated circuits and chip supply for its huge industries, as the continent lacks a domestic chip manufacturing sector of the Asia size.
(Photo: Annabelle Chih/Getty Images)
HSINCHU, TAIWAN – SEPTEMBER 16: Close up of silicon wafer on display at Taiwan Semiconductor Research Institute on September 16, 2022 in Hsinchu, Taiwan. Taiwan’s semiconductor manufacturing capabilities are crucial to global supply chains, with megacap companies like Apple, Nvidia and Qualcomm heavily dependent on the island’s exports. Taiwan accounts for about 60% of global semiconductor foundry revenue, media reports
“Afraid of becoming the victims of a political dispute, European businesses are monitoring this increasingly sensitive issue and assessing potential risks very carefully,” the European Union Chamber of Commerce of China said in its position paper. annual.
The chips are used by companies like the Netherlands-based Stellantis for electric vehicles, while French aerospace company Airbus relies on them for aircraft technologies.
Western Friend Network
The coronavirus pandemic has increased demand for electronic devices, but the tech industry has struggled to keep up due to a shortage of chips. The problem arises again for Europe due to new geopolitical tensions between the West and China.
About 60% of the world’s semiconductors are produced in Taiwan, and those products have become key to a developing technology dispute between Beijing and the West, as noted by the SCMP.
Today, Taiwanese semiconductor producers find themselves in the middle of a simmering conflict.
According to British market research firm Strategy Analytics, Europe buys 80-95% of its produced chips from sources outside the European Union (EU), with the majority coming from Asia.
Analysts predict that Europe would restructure its semiconductor import routes so that chips pass through a network of nations and contract manufacturers favorable to the West.
Brady Wang, an analyst at Counterpoint Research in Taipei, said this network could also encompass Malaysia and Vietnam.
Malaysia’s machinery and equipment manufacturing sector is booming, while Vietnam is the main manufacturing site for multinational tech giants like Taiwan-based Foxconn Technology and Samsung Electronics.
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“China and non-China”
Wang added that the best course of action is to stay away from the police as customers are forced to split supply chains into “China and non-China”.
Analysts predict that companies like Taiwan Semiconductor Manufacturing Co. (TSMC) and United Microelectronics (UMC) will be forced to join pro-Western supply networks.
UMC, which reported revenue of $6 billion last year, said earlier this month that it plans to develop a “diverse manufacturing footprint” that will allow it to streamline logistics and provide enhanced service to international customers.
With revenue of $61.5 billion last year and the ability to manufacture some of the most advanced semiconductors on the market, TSMC is the world’s largest contract chipmaker.
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Written by Joaquin Victor Tacla
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