Semiconductor Supply Chains Will be Hit Hard If China Attacks Taiwan

Taiwan’s top trade negotiator Deng said during the WTO meeting in Geneva that a potential Chinese attack on Taiwan would have a greater impact on world economy than the Ukraine war, saying it would lead to a shortage of semiconductors.

Russia’s invasion of Ukraine in February has caused commodity price hikes and food export bans, leading to fears of famine in poorer countries. Deng argued that the potential disruptions would be worse if China attacks Taiwan. He mentioned the world’s reliance on Taiwan produced semiconductors that are used in electric vehicles (EV) and consumer electronics.

He said the disruptions on supply chains, international economic order and the chance to grow would be much more significant than the current situation. He stated that there would be a worldwide supply shortage.

Taiwan has raised its alert level since Russia invaded Ukraine in February.

Beijing has repeatedly said it wanted “peaceful reunification” with Taiwan but has never dismissed “other options”. China recognizes the island as part of its territory.

Taiwan dominates the global market for production of the most advanced chips and its exports were worth $118 billion last year.

Deng said he hoped to decrease the 40% share of its exports that go to China.

For the first time in its 27 year history, the WTO saw one member invading another. It hope to reach a package of deals, including on food security, but tensions created by the war make it difficult.

The WTO is one of the few multilateral organizations where both China and Taiwan are members, since Beijing blocks its participation in others.

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