The global semiconductor supply chain is at serious risk if conflict arises in the Taiwan Strait.
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(Image credit: Getty Images) As Taiwan ups defense spending and invests in air defenses to fend of possible missile attacks as part of a foreign invasion, a researcher from the Taiwan National Science and Technology Council (NSTC) Hsinchu Science Park Bureau suggested that a single missile strike targeting the Hsinchu Science Park would have catastrophic effects worldwide, resulting in a 6% to 10% drop in global GDP and halting iPhone production for several years. According to Nikkei Asia , Taiwan’s Silicon Valley houses more than 600 tech companies and research bodies, with Taiwan Semiconductor Manufacturing Company (TSMC), the largest chip foundry in the world, operating six major fabs in the area.
“If even one missile from China hits a key manufacturing center in Hsinchu, it would probably be impossible to get a new iPhone for three years,” said NSTC Associate Researcher Scott Huang. This was further corroborated by Lien Hsien-ming, the president of the Taiwanese think tank Chung-Hua Institution for Economic Research, who suggested a global GDP drop of around 6% to 10% because of the disruption in semiconductor production. “Conditions would be catastrophic,” says Lien.
China has always been vocal about its goal of reunifying Taiwan with the mainland, with Beijing saying that it’s willing to use force if necessary. The U.S. intelligence community assesses that the CCP would have the military capability to conduct an invasion of its neighbor by 2027, although this does not mean that it would do so at that time. However, any attack or instability would have a wide-ranging impact on the global semiconductor supply.
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Key considerations
- Investor positioning can change fast
- Volatility remains possible near catalysts
- Macro rates and liquidity can dominate flows
Reference reading
- https://www.tomshardware.com/tech-industry/semiconductors/SPONSORED_LINK_URL
- https://www.tomshardware.com/tech-industry/semiconductors/taiwan-to-up-defense-spending-and-develop-iron-dome-inspired-missile-protection-expert-warns-one-well-placed-chinese-missile-could-make-it-impossible-to-get-a-new-iphone-for-three-years#main
- https://www.tomshardware.com
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Informational only. No financial advice. Do your own research.