Taiwan is home to the world’s largest producer of computer chips, Taiwan Semiconductor Manufacturing Company (TSMC). TSMC’s chips are used in a wide variety of phones, including the iPhone 13. Cars including the Renault Arkana SUV. game consoles, including the Nintendo Switch and Playstation 5. and smart home appliances, including the Revcook smart toaster. Rising tensions between China and Taiwan could disrupt production of these chips, with knock-on effects for the entire global consumer electronics industry. TSMC’s chairman has warned that a Chinese military force or invasion would render the company’s facilities “inoperable” because it relies on “real-time connectivity” with Europe, Japan and the US. Experts told MailOnline that if TSMC is unable to produce chips at its current rate, it could affect the availability of some popular tech devices as early as Christmas – although the bigger effects are likely to be felt next year . TSMC – the most valuable company in Asia and the 10th most valuable company in the world – develops chips for a number of major companies, most notably Apple, but also AMD, MediaTek, Qualcomm, Broadcom, Nvidia and others. The company makes chips that go into Apple’s iPhones, iPads and Silicon Macs, as well as cars and game consoles such as Nintendo’s Switch and Sony’s PlayStation 5

WHAT IS TSMC?

Founded in 1987, TSMC – the most valuable company in Asia and the 10th most valuable company in the world – develops brands for a number of huge players. TSMC has semiconductor manufacturing plants (“fabs”) across the island, although its main operations are in Hsinchu in the north. According to the company’s website, TSMC produces more than 10,000 products for nearly 500 customers worldwide. Its biggest customer is Apple, but other customers include AMD, MediaTek, Qualcomm, Broadcom, Nvidia and Marvell. The company makes A-series chips that go into iPhones and iPads, as well as M-series chips for Apple’s Silicon Macs. TSMC chips are also found in cars and game consoles such as Nintendo’s Switch and Sony’s PlayStation 5.
Ben Barringer, equity research analyst at Quilter Cheviot, told MailOnline that China would likely aim to retain TSMC and “the brainpower behind it” if it took control of the island, in order to gain an advantage over the semiconductor makers based the USA and Korea. “Given its market position, expertise and industry complexity, TSMC is likely to remain of strategic importance to whoever governs Taiwan both now and in the future,” Barringer said. However, there could be “non-belligerent interventions” by China, such as potential blockades, he suggested. “While this would not prevent TSMC from operating, it would limit what it could achieve and potentially delay any technological developments,” he said. “Clearly the threat of war on Taiwan would be very worrying for those involved and we can hope that any tensions can be resolved diplomatically.” Barringer also said that delays and shortages in consumer products will likely occur next year, and that the new iPhone 14, expected to be released next month, will likely be safe because the units will already be manufactured. “The third quarter of the year is extremely important for the semiconductor industry as this is when they produce the components that go into the products that will be bought and sold at Christmas,” he told MailOnline. “If China were to invade immediately, then we might see some negative effect, but even at this point in the year, any delays and shortages would likely show up in 2023.” Home to Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest chip foundry, Taiwan produces more than half of the world’s semiconductors Beijing’s People’s Liberation Army (PLA) is conducting “major military drills and training activities, including live-fire drills in the following maritime areas and their airspace demarcated by lines of communication,” according to the state-run Xinjua news agency. TSMC has semiconductor manufacturing plants (“fabs”) across the island, although its main operations are in Hsinchu in the north. Pictured are components sitting on circuit boards on display at Semicon Taiwan 2018 Simon Thomas, chief executive of British electronics company Paragraf, said consumers would experience “longer waiting times and fewer options for new products” if the geopolitical conflict escalates. “As the supply chain continues with uncertainty, the impact on the availability of different products will become more widespread,” he told MailOnline. “We hope that a military invasion of Taiwan is not inevitable, as the world is already going through significant turmoil, this would certainly be another global crisis.”
This week, TSMC chairman Mark Liu warned that a war between Taiwan and China would make “everyone lose”. Liu told CNN: “If you accept military force or an invasion, you will render the TSMC factory inoperable. Because it’s such a sophisticated manufacturing facility, it depends on real-time connectivity to the outside world, to Europe, to Japan, to the US, from materials to chemicals to parts to engineering software and diagnostics.” Mark Liu (pictured) is president of Taiwan Semiconductor Manufacturing Co. (TSMC). This week, he warned that a war between Taiwan and China would make “everyone a loser” by rendering the company’s facilities “inoperable.” China’s escalating military aggression comes amid a global chip shortage dating back to 2020. The shortage was caused when chip factories around the world were forced to close due to the coronavirus pandemic as part of social distancing measures, leading to months without production. It was exacerbated by an increase in demand for electronics as most people were under stay-at-home orders. Former President Donald Trump also created more demand for TMSC chips due to sanctions imposed on SMIC, a Shanghai-based chipmaker, as well as other Chinese companies as part of his trade war with the country. Another issue is severe droughts in Taiwan, as TSMC needs 156,000 tons of water each day to run its microchip manufacturing plant – enough water to fill about 60 Olympic-sized swimming pools. The chip shortage is so severe that one major industrial group has resorted to buying washing machines and ripping up semiconductors for use in its own chip units, Bloomberg previously reported. Nintendo president Shuntaro Furukawa recently said that there is “no end in sight” to the semiconductor shortage, so the company’s Switch console will be in short supply this year. Images of semiconductor wafers at the Taiwan Semiconductor Manufacturing Co. Innovation Museum. (TSMC) in Hsinchu Taiwan’s dominance of semiconductors is referred to as a “silicon shield,” as the U.S. and other allies would defend it from a military invasion to prevent its high-tech industry from falling into China’s hands. However, new military actions have fueled fears that this shield may be breached. On Tuesday, China’s military began “live fire” drills around the self-ruled island in a bid to intimidate its democratic neighbor. China is also pressuring the US to end its support for Taiwan, as evidenced by a visit by US House Speaker Nancy Pelosi this week. China’s Foreign Ministry called the visit a “serious defiance of China’s strong opposition” before effectively sealing off the island with military exercises. Speaker of the US House of Representatives Nancy Pelosi leaves the chamber in Taipei, Taiwan on August 3, 2022

Why China Targeted Taiwan

China and Taiwan have a long-standing dispute over sovereignty of the island. China considers Taiwan part of its territory, more precisely a province, but many Taiwanese want the island to be independent. From 1683 to 1895, Taiwan was ruled by China’s Qing Dynasty. After Japan claimed victory in the First Sino-Japanese War, the Qing government was forced to cede Taiwan to Japan. The island was under the rule of the Republic of China after World War II, with the consent of its allies, the US and the UK. Chinese Nationalist Party leader Chiang Kai-shek fled to Taiwan in 1949 and established his own government after losing the Civil War to the Communist Party and its leader Mao Zedong. Chiang’s son continued to rule Taiwan after his father and began to democratize Taiwan. In 1980, China proposed a policy called “one country, two systems” under which Taiwan would have significant autonomy if it accepted Chinese reunification. Taiwan rejected the offer. Taiwan today, with its own constitution and democratically elected leaders, is widely accepted in the West as an independent state. But his political status remains unclear.