Taiwan's CEO of Intel has a Precarious Position in the Tech Sector

As part of his company’s ongoing campaign for greater regional diversity in electronics production, Intel Chief Executive Pat Gelsigner stated on Monday that Taiwan’s position in the technology sector is “precarious.”

At the WSJ Tech Live conference on Monday, Gelsinger said that Taiwan “plays such a key role for the technology supply chains, but it’s unstable.” Supply networks that are durable and regionally balanced are required.

His comments reflect fresh concerns about whether China will make an effort to annex Taiwan. When US House Speaker Nancy Pelosi visited the island country earlier this year, China had been conducting naval military drills nearby, and the Russian invasion of Ukraine has caused specialists in international affairs to reevaluate their understanding of geopolitics.

The world’s largest manufacturer of semiconductors, Taiwan Semiconductor Manufacturing Co. (TSMC), is based in Taiwan. For tech behemoths like Apple, Nvidia, Qualcomm, AMD, Tesla, and even Intel itself, it produces CPUs. However, Taiwan is home to a number of other significant firms, including the PC manufacturers Acer and Asus, United Microelectronics, a competitor of TSMC in the semiconductor industry, and Hon Hai Precision Industry Co., better known as Foxconn, which assembles iPhones in Chinese factories.

Of course, Intel stands to gain from any move away from Taiwan for the production of chips. It has promised to provide chips for businesses than simply its own. Intel is constructing new semiconductor production facilities, or fabs, in Ohio, Arizona, and Germany to accommodate anticipated demand. Although that chip “foundry” endeavour is new to Intel, it is the main business of TSMC and Samsung in South Korea, Intel’s other main opponent.

However, Intel also depends on TSMC. The business produces graphics chips for Intel’s Arc family of graphics processors, parts for Intel’s Ponte Vecchio processors, which power the Aurora supercomputer used by the US government, and will provide Meteor Lake components for PC CPUs due out in 2019.

With Russia’s invasion of the nearby Ukraine, Taiwan’s independence from China has come under more scrutiny, undermining the idea that negative economic consequences would dissuade nations from engaging in war. In an August statement outlining its position on Taiwan, China acknowledged the “protracted political confrontation” the two countries have been engaged in, but added that “China’s sovereignty and territory have never been divided and will never be divided, and Taiwan’s status as part of China’s territory has never changed and will never be allowed to change.”

Processors are now a necessary part of almost everything, from automobiles and toys to dishwashers and weaponry. How dependent on processors we have all become, and how difficult it is for suppliers and distributors to keep up with demand, was made clear by a chip scarcity brought on by the COVID outbreak. Because of the significant scarcity, automakers were forced to halt manufacturing and ship automobiles without electronic components.

Political resolve to increase chip manufacturing in the US through a $53 billion, five-year subsidy under the CHIPS and Science Act was one outcome of the issue. Ultimately, Gelsinger anticipates that by the end of the decade, the US will produce 30% of the world’s chips, up from its current 12% share, and that Europe would expand from less than 10% to 20%. Asia’s portion would decrease from over 80% to roughly 50%.

These are long-term issues, according to Gelsigner. He said that it took 30 years for the South China Sea to become the centre of today’s electronics supply chains and that President Joe Biden’s approval of a sizable government aid package is merely the first step in reversing the trend. But he thinks the procedure is already in motion.

Political resolve to increase chip manufacturing in the US through a $53 billion, five-year subsidy under the CHIPS and Science Act was one outcome of the issue. Ultimately, Gelsinger anticipates that by the end of the decade, the US will produce 30% of the world’s chips, up from its current 12% share, and that Europe would expand from less than 10% to 20%. Asia’s portion would decrease from over 80% to roughly 50%.

These are long-term issues, according to Gelsigner. He said that it took 30 years for the South China Sea to become the centre of today’s electronics supply chains and that President Joe Biden’s approval of a sizable government aid package is merely the first step in reversing the trend. But he thinks the procedure is already in motion.

According to Gelsinger, “where the oil reserves are shaped geopolitics over the previous five decades.” “What matters more is where the fabs are for the next 50 years.”