The semiconductor industry has suffered significant shortages during the pandemic, meaning it is still highly dependent on Asia-Pacific. By Viola Caon Investment Monitor
As previously reported, the most significant bottlenecks in the global semiconductor supply chain lie in advanced manufacturing capacity, for which Taiwan and South Korea have a combined 100% of the global manufacturing capacity in seven-nanometre (nm) and 5nm chips.
Boston Consulting Group estimates the split as South Korea (8%) and Taiwan (92%). This monopoly means disruption by natural disasters, infrastructure problems or geopolitical conflicts may result in repeated and severe global chip shortages.
Taiwan’s semiconductor company, TSMC, which has a global monopoly on supplying 5nm chips, is dealing with increasing difficulty in power and water supplies, according to GlobalData principal analyst Michael Orme. In fact, a number of widespread blackouts across the island were reported in March 2022 in addition to others over the past five years.
“There is also a shortage of engineers as the older generation retires and younger ones try to find ways to earn more money on the mainland [China], whose shortage of semiconductor engineers to work in its fabs is acute,” says Orme, who adds that this comes despite the Taiwanese government doing all it can to clamp down on migration to China.
The chips that are at the core of the semiconductor industry are made of silicon. According to GlobalData’s report, China is the world’s leading silicon producer by a considerable measure.