In response to the visit by U.S. Speaker of the House Nancy Pelosi, the CCP halted the import of over 3,000 Taiwanese food items, including citrus and seafood, without prior notice. But it has avoided cutting off Taiwan’s processor chip supply, which is the most crucial manufacturing and technology partnership in the world.
Trade in both directions increased by 26 percent to $328.3 billion last year. The number of chips sold to Chinese factories alone increased by 24.4% to $104.3 billion.
Carl B. Weinberg of High-Frequency Economics said, “The global economy cannot function without chips that are made in either Taiwan or China.”
The two sides have no formal relations but lucrative business ties worth billions of dollars, particularly in the flow of Taiwanese processor chips required by Chinese companies that assemble cellphones and other devices for the global market.
According to the report, despite the CCP’s massive investments in the chip sector, the country can only make low-end chips for things like cars and home appliances and cannot support high-end devices like smartphones, tablets, and medical equipment.
In comparison, Taiwan produces half of the world’s chips and has more advanced technology than China. Chips can be mass-produced by its makers, including TSMC.
According to a study by a US research organization, the self-sufficiency rate for semiconductors in mainland China is just 16.7%% in 2021, and if foreign companies are not included, it will fall to 6.6%.
Taiwan plays an outsized role in the chip industry for an island of 24.5 million people, accounting for more than half the global supply.
Fruit, fish, and other foods are a small part of Taiwan’s exports to China. Chips are China’s biggest import at more than $400 billion a year, ahead of crude oil.
According to the island’s government, Taiwanese companies have invested nearly $200 billion in the mainland over the past three decades.
Overall, China is Taiwan’s biggest trading partner, taking more than twice as much of its exports as the United States, the island’s No. 2 foreign market.