The chief executive of one of the most important companies involved in making vital semiconductor chips said that if China invaded Taiwan, it would have a major impact on the global high-tech supply chain “within weeks”.
In an interview with Sky News, Doris Hsu, CEO TaiwanGlobalWafers, based in GlobalWafers, also said customers were “very concerned” about China’s intentions in Taiwan, which is one reason the company chose to locate its new factory in Texas.
Rising tensions across the Taiwan Strait have raised concerns that companies will seek to protect themselves by withdrawing from the self-governing island China Be seen as your own and as a direct long-term investment elsewhere.
Taiwan is an important global player in technology development and manufacturing, especially semiconductors.
Semiconductors are the vital microchips known as the “brains” in modern electronics; they power everything from airplanes and appliances to cars and smartphones.
Taiwan manufactures about 90 percent of the world’s most advanced semiconductors and about 50 percent of the broader market, much of it by global leader TSMC.
Any disruption to this would be disastrous for global supply chains.
GlobalWafers manufactures silicon wafers, one of the key components of semiconductors. It is the world’s third-largest supplier of the component and one of TSMC’s most important suppliers.
“Some of our clients are really very concerned about Taiwan’s overall security,” Ms Hsu said. “They want us to be more diverse.”
“In 20 years, we’ve never been asked as often as we’ve been recently, with a lot of customers saying, ‘Hey Doris, what if something goes wrong? What’s your contingency plan?'”
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Speaking of the company’s new $5bn (£4bn) chip factory in Texas, she said one of the reasons for the decision was “emergency or risk management”.
While GlobalWafers was already a very global company with 18 operations in nine countries, the threat of future instability was weighing on the decision.
“I’ve been in this industry for over 20 years,” she says.
“In the past 20 years, I have had to care more about business, economic issues, engineering issues, what about intellectual property? What about your leadership or technology? But now I have to think about issues related to global politics!”
“Attacks will affect $2 trillion in trade”
Semiconductors are just one area in which Taiwan excels. Despite its small size, it is the 16th largest trading economy in the world.
Research firm Rhodium Consulting estimates that any kind of attack or blockade on Taiwan would affect $2 trillion in economic activity, before taking into account any sanctions or secondary effects.
There are concerns that some companies, burnt out by their experience in Russia, may seek to move some of their operations off the island.
British bike manufacturer Brompton Bikes is just one company that says it will.
But experts say there has not been a massive exodus and more of a slow flow of long-term investment decisions elsewhere.
“Most companies aren’t actually thinking about pulling out or relocating — but expanding,” explained Kirsty Tzun-Tzu Hsu, director of the Chung-Hwa Economic Research Institute’s Center for ASEAN Studies in Taiwan.
“They’re extending their supply or their supply chain from Taiwan to other countries or other regions so that if Taiwan doesn’t produce as soon as possible or in the expected time frame, they might have some place to support them.”
China is one of many countries that also depend on Taiwan’s high-tech industries, which some experts believe is one reason the invasion may not happen.