Taiwan says it's asking chip firms to help ease vehicle chip shortage

Marco Green
January 26, 2021

Taiwanese media outlets reported that Taiwan Semiconductor Manufacturing Company, or TSMC, is ready to strive to meet the demand.

Taiwan has the world's second-largest semiconductor industry by revenue after the U.S. The island is also home to other vital players in the global chip supply chain such as MediaTek, the world's biggest mobile chip developer, and ASE Technology Holding, the largest chip packaging and testing house.

What Caused the Sudden Chip Shortage?

The trade and tech tensions between the USA and China over the past two years have highlighted Taiwan's importance in the global supply chain, as semiconductors are the heart and brain of technologies from smartphones and autonomous driving vehicles to space tech.

Amid the coronavirus pandemic, global auto sales briefly suffered a record slump, but they are recovering quickly.

Automakers across the globe are shutting down production due to complications in the supply of semiconductors. This is because firms are not able to manufacture their goods and, in this case - the vehicles. "But now they want to boost their production".

Global auto production will be lowered by about 1.5 million vehicles due to the shortage, mainly in the first six months of the year, Mitsubishi UFJ Morgan Stanley Securities estimates. The Louisville plant employs roughly 3,900 hourly workers and now builds the popular Ford Escape SUV and luxury Lincoln Corsair.

"I would be pleased if you could take on this matter and underline the importance of additional semiconductor capacities for the German automotive industry to TSMC", the German minister wrote in the letter.

Meanwhile, TSMC said that they are taking the issue seriously and in fact, the chips shortages in the auto industry are very important to them.

A senior official at Japan's Ministry of Economy, Trade and Industry told Reuters Japan's auto manufacturers' association and TSMC were already in touch, and the ministry has also reached out to Japan's de facto embassy in Taipei to ask for their support in those talks. In addition, Daimler reduced production at its Bremen assembly plant which employs around 12,500 people.

As a result of the semiconductor chips shortage, carmakers around the world are being forced to close their manufacturing plants.

The chip shortages are further exacerbated by trade tensions and tariffs between the US and China brought forth by the former Trump administration, which led to suppliers scaling back exports to the U.S.

In 2018, the Trump Administration imposed a 25% tariff on US imports of semiconductors and other goods from China following an investigation into the country's trade practices, which government officials deemed unfair.

Other reports by Click Lancashire

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