Taiwan tensions threaten supply of semiconductors

Taiwan tensions threaten supply of semiconductors

A logo of Taiwan Semiconductor Manufacturing Co on display at the firm's headquarters in Hsinchu, Taiwan. REUTERS
A logo of Taiwan Semiconductor Manufacturing Co on display at the firm's headquarters in Hsinchu, Taiwan. REUTERS

The growing tensions between China and Taiwan have left the Thai automotive industry facing fresh concerns as manufacturers fear China may ban the export of raw materials for chipmaking to Taiwan, aggravating the prolonged global shortage of semiconductors, says the Federation of Thai Industries (FTI).

Higher car prices, including those of electric vehicles (EVs), are expected if the chip scarcity continues, according to the FTI's automotive club.

China started military exercises in the seas near Taiwan, following the recent visit of US House Speaker Nancy Pelosi to what Beijing regards as a breakaway province. Chinese authorities also banned the import of some fruits and fish products from Taiwan, according to media reports.

If the China-Taiwan relationship escalates and Beijing decides not to export silica sand, which is needed for chipmaking, to Taiwan, the semiconductor shortage will worsen, said Surapong Paisitpatanapong, vice-chairman and spokesman for the FTI's automotive club.

Silica sand imported from China by Taiwan Semiconductor Manufacturing Co (TSMC) accounts for 90% of total silica sand used by the company, he said.

"TSMC supplies chips to many industries, including the automotive industry. If its production is disrupted, the ongoing [semiconductor] shortage will get worse," said Mr Surapong.

TSMC is the world's largest contract semiconductor maker, according to media reports.

The FTI said it cannot predict how long the semiconductor shortage will last. The problem already caused car manufacturers in Thailand to change car production and delivery plans.

Automakers needed to suspend production of some car models and delay deliveries. Some need to consider increasing the prices of cars and motorcycles due to the rise in semiconductor prices.

Mr Surapong said the FTI expects global car makers in Thailand to increase prices of EVs next year.

Some companies already raised the prices of some oil-powered car models, he said.

The price rise will affect car sales in the domestic market, but it will boost sales of used cars, said Mr Surapong.

The club earlier said it believes Thailand's car manufacturing is likely to fall short of the target of 1.8 million units this year due to various factors, notably the protracted global semiconductor shortage.

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