Impact of China–Taiwan Geopolitical Risks on Semiconductor Sector

Geopolitical risks on the global semiconductor industry increased after a recent visit by US diplomats to Taiwan, which triggered stark political opposition and military responses by China. In this report, we discuss the possible impact on the global supply chain of semiconductors if the geopolitical tensions between China and Taiwan increase. We focus on (a) the global importance of the semiconductor industry of Taiwan, as the region is home to the world’s largest foundry operations; (b) possible risks from the disruptions of the world’s leading and Taiwan’s largest semiconductor foundry company – TSMC; and (c) potential winners and losers from the disruption of TSMC’s operations.