A conflict over Taiwan would shock the global semiconductor industry, with Japan, South Korea and the Philippines being the hardest hit, the Economist Intelligence Unit (EIU) said in its latest report.
The Economist Group’s analysis unit — which warned of “devastation” to Asia’s economy in the event of conflict across the Taiwan Strait — said that it was assuming a hypothetical full-conflict scenario, involving direct military participation by Taiwan, China and the US, with the escalation initiated by China and the US’ participation activating its regional security alliances.
The report said that the risk of a direct Chinese military assault on Taiwan was “very unlikely.”
Photo: CNA
However, Asian economies have significant vulnerabilities tied to Taiwan, especially with regard to advanced chip manufacturing, it said.
A previous EIU report in March said that Taiwan makes 60 percent of the world’s semiconductors and 90 percent of advanced chips.
At best, a conflict would disrupt air and maritime links needed to import items necessary for chip fabrication and exporting chips, the report released this week said.
“At worst, a war would result in the complete destruction of Taiwan’s chipmaking facilities,” it added.
Either outcome would hinder swathes of the global economy, affecting the production of smartphones, computers, home appliances and vehicles, and limiting other sectors, including financial services, it said.
Taiwan is critical to the chip industry, as it is the only place that makes the most advanced semiconductors — those using process technologies of less than 10 nanometers, the report said.
South Korea and Japan would be the obvious alternatives to replace Taiwan’s advanced chipmaking operations, but that would require an effort spanning years and massive investments, it said.
“China is a major exporter of semiconductors, but in the event of a cross-strait conflict we would expect sourcing from the Chinese market to be difficult, not only as a result of disrupted factory production and logistics, but also as a consequence of likely trade and financial prohibitions by the US and others,” the EIU report said. “China could also impose export bans on countries judged to be hostile towards its role in the conflict.”
Japan, South Korea and the Philippines would be the most exposed in the event of a war, while Australia, Hong Kong, Malaysia, Thailand and Vietnam would face “severe exposure,” it said.
It excluded Taiwan and China from its risk of exposure analysis.
The countries most exposed to the economic consequences of war are generally those that might face direct military action due to being members of US-led security alliances and hosting US military bases, it said, adding that heavy reliance on Taiwanese chips was a secondary factor.
“We view the Philippines, Japan and South Korea as the countries most exposed to a conflict over Taiwan,” the report said. “Our assessments for these three countries reflect geopolitical realities, as well as heavy reliance on trade with China. Their geographic proximity to the Taiwan Strait, alongside their roles as important US treaty allies, suggests a high risk that they will be drawn into a conflict.”
“The hosting of US military bases in all three of these countries, in particular, also highlights their vulnerability to a pre-emptive Chinese attack,” it said.
Hong Kong’s vulnerability stems from damaging economic sanctions that the West would likely impose on China and its territories should Beijing invade Taiwan, it said.
DISCONTENT: The CCP finds positive content about the lives of the Chinese living in Taiwan threatening, as such video could upset people in China, an expert said Chinese spouses of Taiwanese who make videos about their lives in Taiwan have been facing online threats from people in China, a source said yesterday. Some young Chinese spouses of Taiwanese make videos about their lives in Taiwan, often speaking favorably about their living conditions in the nation compared with those in China, the source said. However, the videos have caught the attention of Chinese officials, causing the spouses to come under attack by Beijing’s cyberarmy, they said. “People have been messing with the YouTube channels of these Chinese spouses and have been harassing their family members back in China,”
The Central Weather Administration (CWA) yesterday said there are four weather systems in the western Pacific, with one likely to strengthen into a tropical storm and pose a threat to Taiwan. The nascent tropical storm would be named Usagi and would be the fourth storm in the western Pacific at the moment, along with Typhoon Yinxing and tropical storms Toraji and Manyi, the CWA said. It would be the first time that four tropical cyclones exist simultaneously in November, it added. Records from the meteorology agency showed that three tropical cyclones existed concurrently in January in 1968, 1991 and 1992.
GEOPOLITICAL CONCERNS: Foreign companies such as Nissan, Volkswagen and Konica Minolta have pulled back their operations in China this year Foreign companies pulled more money from China last quarter, a sign that some investors are still pessimistic even as Beijing rolls out stimulus measures aimed at stabilizing growth. China’s direct investment liabilities in its balance of payments dropped US$8.1 billion in the third quarter, data released by the Chinese State Administration of Foreign Exchange showed on Friday. The gauge, which measures foreign direct investment (FDI) in China, was down almost US$13 billion for the first nine months of the year. Foreign investment into China has slumped in the past three years after hitting a record in 2021, a casualty of geopolitical tensions,
‘SOMETHING SPECIAL’: Donald Trump vowed to reward his supporters, while President William Lai said he was confident the Taiwan-US partnership would continue Donald Trump was elected the 47th president of the US early yesterday morning, an extraordinary comeback for a former president who was convicted of felony charges and survived two assassination attempts. With a win in Wisconsin, Trump cleared the 270 electoral votes needed to clinch the presidency. As of press time last night, The Associated Press had Trump on 277 electoral college votes to 224 for US Vice President Kamala Harris, the Democratic Party’s nominee, with Alaska, Arizona, Maine, Michigan and Nevada yet to finalize results. He had 71,289,216 votes nationwide, or 51 percent, while Harris had 66,360,324 (47.5 percent). “We’ve been through so
RSS