Why is Taiwan so Important?

May 25, 2022 | Ask "Z" Economist

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Summary: The median semiconductor chip inventory held by electronic companies like automakers & medical device manufacturers fell from 40 days in 2019 to less than 5 days in 2021 according to the Commerce Department. Further, it is estimated that Taiwan Semiconductor Manufacturing Company (TSM) has a commanding ~55% market share of the chip foundry market. Notably, foundries are used as a wholesale outsourcing solution for electronic companies that put their own brands on the chips manufactured by TSM. However, TSM’s market share is understated as the company’s dominance of manufacturing high-end chips is believed to be much higher than its 55% share of the entire chip market. In conclusion, the huge end-market for all things electronic are almost completely dependent on a single company located in Taiwan (an object of China’s intense scrutiny).   

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