During the semiconductor shortage, if there’s one thing we’ve learned, it’s that Taiwan has an absolute stranglehold on the chip production market. If you want to get specialized chips made with the latest technology, chances are you’ll get it in Taiwan. The country accounts for 64% of the global foundry market with heavyweights like TSMC producing chips for all sorts of large companies. However, the changes coming from the United States could mean changes for that dominance, and it’s going to be interesting to watch.
A Bloomberg (opens in a new tab)report (via Tom’s Hardware (opens in a new tab)) says a combination of changes to US sanctions on China as well as China’s Covid lockdowns could lead to big changes according to a Taiwanese economics official. Since China is spending a pretty penny on chips from Taiwanese manufacturers, a major economic downturn is expected thanks to US influence.
The United States has imposed restrictions (opens in a new tab) on the Chinese supercomputer sector, prohibiting them from buying advanced chips made with American technologies in Taipei. That means companies like TSMC and UMC will take a hit in sales that would otherwise come from those Chinese markets.
New changes to China’s anti-Covid lockdowns will mean production in Chinese factories is also drastically reduced, so fewer chips are being bought anyway. While production is falling in China, demand is simply much weaker, which means Taiwanese chipmakers should expect far fewer orders.
Tsai Yu-Tai, head of statistics at the General Directorate of Budget, Accounting and Statistics, expects Taiwan’s gross domestic product growth to fall to 3.06% in 2022 and 2.75% in 2023. But these are only the potential short-term problems for the Taiwanese chip market.
With the US CHIPS and Science Act recently passed by Congress (opens in a new tab), North America should see an influx of fabs built on its soil. The $52 billion in subsidies is sure to encourage more manufacturers to set up shop in the United States, potentially taking even more business to Taiwan. Europe has also given its own benefits, and although Taiwan has announced tax breaks, they have yet to provide subsidies, which could be more devastating than an earthquake for the industry. (opens in a new tab).
Of course, we’ll have to wait and see how it all actually pans out to see what kind of a kick Taiwan gets from all of this. Being such an established powerhouse of chip production, it’s hard to imagine it otherwise. However, if you are looking for a new career in the US and Europe, you are desperate to jump on the semiconductor bandwagon and the semiconductor skills shortages (opens in a new tab)becoming a chip engineer might not be a bad option.