Taiwan’s chip sector will remain competitive despite China’s ambitions

Taiwan hopes to give China a run for its money, at least in the short term.

The island’s economy minister told CNBC that Taiwan will remain competitive in the semiconductor space, even as China ramps up its chip ambitions.

Wang Mei-hua, head of the Ministry of Economic Affairs, pointed out to Taiwan Semiconductor Manufacturing Company, saying that the world’s largest contract chip maker is “globally competitive in foundry manufacturing due to its technical advancements.”

“Taiwan will continue to develop our semiconductor industry. In the short term, I think we will remain competitive,” he told CNBC’s Emily Tan on Wednesday.

When asked if China’s drive to develop its semiconductor industry raises concerns for Taiwan, he noted that Taiwan’s chip manufacturing sector has developed over several decades and is strong.

“We have a very efficient manufacturing base,” he said, according to a Mandarin translation of his comments.

Global semiconductor shortage

Wang also said Taiwanese companies are doing their best to fulfill orders for auto chips amid a global shortage.

The Covid-19 lockdowns last year created a surge in demand for consumer electronics, causing a deficit in the semiconductor sector. As a result, some automakers have been forced to cut back or cut production.

Our chipmakers are already producing at full capacity … by supplying more auto chips, you are not only helping the global auto industry, but also helping the global economic recovery.

Wang Mei-hua

Head of the Ministry of Economic Affairs of Taiwan

Demand for auto chips fell in April 2020, but accelerated in August and September, Wang said.

“It’s not easy to make French fries. It doesn’t come out the day after placing an order,” he explained. “When orders for auto chips were cut, other orders for information and communications technology came in and took up capacity.”

“Our chipmakers are already producing at full capacity,” he said. “But we have had conversations with them, they are aware that supplying more auto chips not only helps the global auto industry, but also the global economic recovery.”

Taiwan and its chip suppliers have also met with the United States for talks. “I think Taiwan is very keen to be a friendly supply chain partner in the semiconductor space,” he added.

Optimistic about Taiwan’s economy

Wang was optimistic about the outlook for Taiwan’s exports, which benefited from growing demand for laptops due to closures and work-from-home deals.

“From last August to January this year, our exports have increased dramatically for six consecutive months. This has never happened before,” Wang said.

Reuters reported that Taiwan’s exports soared in January by almost 37% year-on-year to reach $ 34.27 billion, the highest monthly figure on record.

“So far, our exports have done very well, not only in our high technology, but also in many other sectors, including petrochemicals, textiles and machinery,” he said. “Global inventories have been falling and the economy is recovering, even our shipbuilding business is growing at double digits. This is where we are now.”

– CNBC’s Arjun Kharpal and Michael Wayland contributed to this report.


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