Why Taiwan is so important in the chip market and how a production disruption could affect the world

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Asian country hit by earthquake last Wednesday (3) produces 90% of the most advanced semiconductors on the planet. Its clients are big techs, automakers and industries from all over the world. Why Taiwan is considered a powerhouse in chip manufacturing and how a disruption in production could impact the world Getty Images The United States is home to the world’s main technology companies, such as Apple, Amazon and Microsoft. But the “heart” of the products of these and many other companies, the chip, is mainly produced in a place very far away: Taiwan. Last Wednesday (3), the Asian country was hit by the strongest earthquake recorded there in 25 years, and chip factories even stopped some operations throughout the day to assess the impacts. Early reports are that there was no serious damage. But the tremor raised concerns about how a natural disaster could destabilize the supply of these components and cause an even bigger blow than the recent “chip crisis”, which hit the industry between 2020 and 2023 and slowed down even car production. ⚡After all, what is a chip? It is a very small component, made of semiconductor material, mainly silicon (found in sand). The chip contains an electronic circuit and is considered a semiconductor because it allows less electricity to pass through than copper, for example, but it is not an insulator. By making electricity pass and stop passing, chips allow, for example, electronic devices to execute commands at the press of a button or for data to be stored, among many functions. 🤳 Who depends on chips: it’s not just cell phones that have chips… they’re in bank cards, in refrigerators, in washing machines, in LED lamps, on planes. In today’s cars, thousands of chips are used in various systems, such as on-board computers, engine management and navigation control. ‘Chip War’: how Taiwan became the center of political and economic dispute between China and the USA ⚙️Why Taiwan dominates: the USA invented the chip, but today the Asian country produces 90% of the most advanced models used in the world. Including those needed to develop artificial intelligence, which are quite sophisticated. Taiwan invested in the sector from the 1970s onwards, going from being a region known for agricultural production to becoming the export center for the most advanced chips in the world. How a group of young engineers made Taiwan a powerhouse in microchips The largest company in the sector in the world is located there. Founded in 1987, Taiwan Semiconductor Manufacturing Company (TSMC) supplies components to customers such as Apple, creator of the iPhone, and Nvidia, which has become one of the most valuable companies in the world thanks to the development of more complex chips, those used for intelligence. artificial. “Practically every cell phone, most computers and any database in the world has chips produced by TSMC and only it is capable of producing them. 90% of the most advanced processing chips on the planet come from there”, says Chris Miller, historian and author of “The Chip War”. TSMC chip factory, the world’s largest producer in the sector, based in Taiwan Taiwan Semiconductor Manufacturing Co., Ltd. TSMC’s empire includes nine factories in Taiwan. The company is also building a unit in Japan and intends to have others in the US and Germany. It employs 73 thousand people, according to Forbes. According to “The New York Times”, South Korea, where Samsung is based, is just behind Taiwan in chip manufacturing “power”. However, Taiwanese semiconductors are still smaller and faster than South Korean ones. Taiwan’s dominance even caused a political crisis with the USA, which, through sanctions, “banned” the country from exporting technology to China, claiming that the Chinese want to develop tactical war weapons. From Silicon Valley to Taiwan: see the global technological evolution of chip production What happens if chip production stops The chip market is already experiencing a crisis and is impacting several companies from different sectors. A possible shutdown could worsen the situation. The coronavirus pandemic boosted the sale of electronic devices for people to work from home, remember? At the same time, the automotive industry reduced demand for chips at the beginning of the pandemic, but it returned strongly at the end of 2020. However, automakers found it difficult to obtain the semiconductors they needed, including simpler chip models. In 2022, several manufacturers stopped and stopped producing vehicles due to a lack of them. A survey by consultancy Gartner released in 2021 indicated that the shortage also delayed the launch and supply of cell phones. What the main companies say According to Reuters, TSMC said it temporarily suspended work in its factories after the earthquake to assess the impacts. Also this Wednesday, in a note sent to the NPR agency, he reported that only “a small number of equipment was damaged, in certain units”, partially impacting operations. “In any case, there was no loss to essential tools,” the company stated. United Microelectronics Corp (UMC), TSMC’s rival in the country, said that all employees were safe and that its factories were operating normally last Wednesday, according to information from Reuters. Some machines were shut down, but the company was working to restart them. NPR pointed out that, considering the volume of production concentrated in the country, market analysts say that even minimal interruptions could delay the shipment of production and generate millions of dollars in losses. Fantastic shows chip research center in the USA; see Fantastic VIDEO shows how a chip factory works; see VIDEO See on Fantástico a global dispute that puts the production and trade of chips at risk See on Fantástico a global dispute that puts the production and trade of chips at risk

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