At the centre of the simmering tension following US House of Representatives Speaker Nancy Pelosi’s visit to Taiwan is the race to dominate the global semiconductor trade.
Taiwan is estimated to host 20 per cent of the total global semiconductor capacity — and China and the US happen to be two of the biggest consumers.
Have a look at these facts to get a sense of how high the stakes are:
1. According to a Boston Consulting Group (BCG) report, semiconductors are the world’s fourth most traded product, involving as many as 120 countries. It is only behind crude oil, motor vehicles and spare parts, and edible oil.
2. The total global semiconductor trade reached $1.7 trillion in value in the pre-pandemic year of 2019.
3. China’s share in the design and manufacturing of semiconductors is low but it accounts for the production of 35 per cent of all chip-enabled devices.
4. The US is not only the biggest consumer of semiconductor-based devices, it also headquarters 33 per cent of the makers of such devices — essentially, the US is a big beneficiary of the burgeoning semiconductor trade.
TAIWAN’S PLACE IN THE SEMICONDUCTOR MARKET
Taiwan has two of the five largest foundries for semiconductor manufacturing. The Taiwanese firm TSMC produces logic chips that are required for data centres/AI servers, PCs, and smartphones, according to the BCG report.
The country constitutes nine per cent of the overall value chain of the semiconductor market, which is exactly equal to China. The US (38 per cent), South Korea (16 per cent), and Japan (14 per cent) are ahead of Taiwan. However, in terms of semiconductor consumption, Taiwan accounts for only three per cent, while the US and China account for nearly 25 per cent each.
INDIA’S TRADE WITH TAIWAN
Taiwan has become increasingly important to India. In the last fiscal year 2021-22, India imported goods worth Rs 46,515 crores. This was 56 per cent higher than the previous year and 62 per cent more than the year before that (2019-20).
Electrical machinery (27.7 per cent), plastic and its articles (17.6 per cent), nuclear reactors (17.3 per cent), organic chemicals (15.9 per cent), and iron & steel (4.1 per cent) were India’s highest imports from Taiwan in the last fiscal year.
TAIWAN’S TRADE WITH THE US AND CHINA
Taiwan’s trade with both the US and China has been increasing over the years. In the fiscal year 2021, Taiwan exported goods worth $65.7 billion to the US, while that to China was worth $125.9 billion.
However, the growth rate of Taiwan’s exports to the US was 29.9 per cent while that to China was 22.9 per cent.
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