Wednesday 3 August 2022 05:18 PM How a war between China and Taiwan could cause product shortages trends now
China and Taiwan are on the brink of war after a long-standing dispute over the island's sovereignty came to a head – with potentially massive implications for consumer technology supplies.
Taiwan is home to the world's biggest producer of computer chips, Taiwan Semiconductor Manufacturing Company (TSMC).
TSMC's chips are used in a wide variety of phones, including the iPhone 13; cars including the Renault Arkana SUV; gaming consoles including the Nintendo Switch and Playstation 5; and smart home devices including the Revcook smart toaster.
Rising tensions between China and Taiwan could disrupt the production of these chips, with knock-on effects throughout the global consumer electronics industry.
TSMC's chairman has warned that a Chinese military force or invasion would make the firm's facilities 'inoperable' because it relies on 'real-time connection' with Europe, with Japan and the US.
Experts have told MailOnline that, if TSMC is unable to produce chips at its current rate, it could affect availability of some popular tech devices as soon as Christmas - although the biggest effects are likely to be felt next year.
TSMC – the most valuable company in Asia and the 10th most valuable company in the world – develops chips for a range of big companies, predominantly Apple, but also AMD, MediaTek, Qualcomm, Broadcom, Nvidia and more. The firm makes chips that go into iPhones, iPads and Apple's Silicon Macs, as well as automobiles and gaming consoles, including Nintendo's Switch and Sony's PlayStation 5
Ben Barringer, equity research analyst at Quilter Cheviot, told MailOnline that China would likely aim to preserve TSMC and 'the brain power behind it' if it took control of the island, in order to gain an advantage over US and Korean based semiconductor manufacturers.
'Given its market position, the expertise it has and the complexity of the sector, TSMC is likely to remain of strategic importance to whoever governs Taiwan both now and in the future,' Barringer said.
However, there could be 'non-combat interventions' from China such as potential blockades, he suggested.
'While this would not prevent TSMC from operating, it would limit what it could achieve and potentially delay any technological advancements,' he said.
'Clearly the threat of war in Taiwan would be very troubling for those involved and we can hope any tensions can be resolved diplomatically.'
Barringer also said that delays and shortages in consumer products would most likely occur next year, and that the new iPhone 14, expected to be released next month, will likely be safe because units will have already been built.
'The third quarter of the year is extremely important for the semiconductor industry as this is when they produce the components that go into the products that will be bought and sold at Christmas,' he told MailOnline.
'If China were to invade imminently then we may see some knock-on effect, but even at this point of the year any delays and shortages would most likely occur in 2023.'
Home to the Taiwan Semiconductor Manufacturing Company (TSMC), the world's largest chip foundry, Taiwan produces more than half of the world's semiconductors
Beijing’s People’s Liberation Army (PLA) is conducting 'important military exercises and training activities including live-fire drills in the following maritime areas and their air space bounded by lines joining,' according to the state Xinjua News Agency
