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A global shortage of semiconductors will ease a little in 2022 — likely driving stock prices down — leaving a lot of executives, bankers and shareholders left to question their ebullience in pouring record amounts of money into production facilities, and sending the market value of chipmakers ever higher. But it’ll take a while before the real pain from such misplaced confidence starts to show, so expect a transition year as we shift from boom to bust.
One of the big takeaways from this crisis is the world waking up to the plight of Taiwan and its importance to not only the global tech industry, but in holding off the spread of China’s authoritarianism throughout the region. An easing of the supply chain crunch won’t change that role, because cybersecurity is becoming the major battleground between world powers. Taiwan is on the frontlines there, too.
Playing the national security card is a potentially lucrative one for America’s biggest chip manufacturer, but the reality is, the US will never be able to replace the global electronics infrastructure that’s particularly well-entrenched in China, Japan, South Korea and Taiwan. Instead, Washington should manage the risk and work with trusted nations to ensure every step in the process is reliable — a tough task when executives keep disrespecting your closest allies, like those in Seoul and Taipei.
It’s unfathomable that the world’s most important chipmaker keeps 90% of capacity within a 100-mile radius, but there you have it. What’s more, Taiwan Semiconductor Manufacturing Co. is reticent to expand overseas and is doing so only to appease foreign governments and customers. It’s a global company with an insular attitude that needs to change.
For more than 70 years, the island has been an important middleman in trade and economic ties between China and the West, and commerce has greased the wheels in the absence of political links. But a stricter tone from Beijing toward Taiwan’s businesspeople risks not only its connections to Taipei but to the rest of the world.
New tools and tactics deployed by hackers in China give hints as to how the global cyber cold war may play out in coming years. Rather than just chasing down ransom payments, malware attacks against targets in Taiwan are being used to distract and confuse victims while more nefarious operations are carried out. Other nations should expect the same.
A global shortage ought to be the best time to be a chip manufacturer. Yet one of the world’s biggest names, the newly listed GlobalFoundries Inc., still struggles to spin a profit. That should serve as a warning to governments and shareholders keen to invest billions of dollars on further capacity.
—Bloomberg