A new report says that if Taiwan were to suddenly stop producing semiconductor chips, it would cost global electronic device makers almost half a trillion US dollars. The research by the Semiconductor Industry Association and Boston Consulting Group highlights various potential chokepoints in global semiconductor supply chains.
The new figures come as the world experiences a global shortage of semiconductor chips, partly down to an unexpected boom in demand for consumer electronics. That has left major producers like Taiwan’s TSMC scrambling to increase production. But the report, entitled “Strengthening the Global Semiconductor Supply Chain in an Uncertain Era”, also draws attention to the effect that accidents and natural disasters can have on supply. For example, the ongoing drought in Taiwan threatens to slow down chip production, itself a very water-intensive process. And a recent fire in a plant in Japan has also affected global supply.
According to the report, Taiwan has 92% of the global market share in the most advanced semiconductor chips, with South Korea making up the remaining 8%. The report says this kind of regional concentration of expertise creates significant risks, since geopolitical tensions or natural disasters could completely sever a link in the intricate global supply chain.
Ultimately, however, the authors conclude that bringing the semiconductor supply chain down from a global to a regional level would be too expensive. It would also raise the price of semiconductors themselves. Instead, the report calls for governments to ensure supply chain resilience through other means.