Taiwan’s chip industry 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 market, even as China increases its chip ambitions.

Wang Mei-hua, head of the economic affairs ministry, pointed to the Taiwan Semiconductor Manufacturing Company, and said the world’s largest contracted chip maker is “globally competitive in foundry manufacturing due to its technical advances”.

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

Asked whether China’s drive to develop its semiconductor industry raises concerns for Taiwan, she pointed out that Taiwan’s chip-making sector has developed over several decades and is strong.

“We have a very efficient manufacturing base,” she said, according to a translation of her comments in Mandarin.

Wang also said that Taiwanese companies are doing their best to fulfill automotive chip orders amid global shortages.

The Covid-19 blockades last year created an increase in demand for consumer electronics, which caused a drop in the semiconductor sector. As a result, some automakers were forced to cut or slow production.

Demand for automotive chips dropped in April 2020, but gained momentum in August and September, Wang said.

“It’s not easy to make fries. It doesn’t come out the next day after you place an order,” she explained. “When orders for automotive chips were cut, other orders for information and communication technology arrived and occupied capacity.”

“Our chip makers are already producing at full capacity,” she said. “But we have already talked to them, they are aware that providing more automotive chips will not only help the global automotive industry, but also the global economic recovery.”

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

Wang was optimistic about the prospects for Taiwanese exports, which benefited from the growing demand for laptops due to blockages and work at home deals.

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

Reuters reported that Taiwan’s exports soared in January by almost 37% over the previous year, to $ 34.27 billion, the highest monthly figure ever recorded.

“So far, our exports are doing very well – not only in our high technology, but also in many other sectors, including textile petrochemicals and machinery,” she said. “Global inventories are falling and the economy is recovering, even our shipbuilding business is growing at double digits. That’s where we are now.”

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