Taiwan seeks resilient supply chain for semi conductors amid tensions with China | Ground Report

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Amid Chinese intimidation, Taiwan is looking for alternate sites to manufacture semi conductors and a resilient global supply chain. The island is in talks with India to manufacture the chips in India to break the Chinese stranglehold around Taiwan.

India Today spoke to Gabriel Chou, deputy project director, Macronix international, one of the largest semi conductor manufacturers in Taiwan, on how the firm aims to maintain a resilient supply chain.

More than one lakh people are engaged in integrated circuit manufacturing in Hsinchu Science Park, located 80 kms from Taipei.

“We work with our customers. We prepare raw materials early to ensure smooth production. A major proportion of our raw materials come from Japan. But, semi conductors need a global supply chain for raw materials. To ensure resilient supply, we prepare in advance. From raw material to finished product, there are thousands of manufacturing steps and if one step goes wrong the production has to be stopped,” Gabriel Chou told India Today.

“We ensure we have a proper reservoir of raw materials needed to manufacture semi conductors. That is the key,” he added.

READ | Why Taiwan’s chips could be at the centre of rising US-China tension

Taiwan manufactures close to 90 per cent of semi conductors used in electronics. These chips power much of the world’s daily-use electronic equipment, such as laptops, watches and games consoles.

The US, other Western nations and the Taiwan Semiconductor Manufacturing Corp (TSMC) have been worried about the eventualities if China goes for an invasion and cuts off supplies of chips that are crucial to the global economy.

TSMC is one of the key manufacturers of silicon chips. TSMC-made chips are used in almost 60 per cent of smartphones.

US House Speaker Nancy Pelosi, whose visit to the island sparked angry reactions from China, had pushed for a TSMC unit in Arizona. It is likely to start operations in 2024.

If there is a disruption in TSMC’s operations amid tensions with China, the world may end up losing supply of around 60 to 70 per cent of phone and computer chips.

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