If there is one thing we have learned during the semiconductor shortage, it is that Taiwan is absolutely dominant in the chip production market. If you want to make a special chip with the latest technology, there is a good chance it will be made in Taiwan. Taiwan has 64% of the global foundry market, and large companies like TSMC are sending chips out for all kinds of giant companies. However, changes coming from the U.S. could alter this dominance, and it will be interesting to see what happens in the future.

According to a report by Bloomberg (opens in new tab) (via Tom's Hardware (opens in new tab)), Taiwanese business insiders say that a combination of U.S. sanctions changes against China and the Chinese Covid lockdown could bring about significant changes Given that China spends a significant amount of money on chips from Taiwanese manufacturers, the economy is expected to suffer a significant downturn thanks to the U.S. impact.

The US has placed restrictions (open in new tab) on China's supercomputer sector, preventing it from purchasing advanced chips made with American technology in Taipei. This means that companies like TSMC and UMC will take a big hit in sales that they would have gotten from these Chinese markets.

The new changes to China's anti-cobid lockdown will mean that production at Chinese fabs will also be significantly reduced, so fewer chips will be purchased anyway. If production in China is reduced, Taiwanese chipmakers can expect to see a sharp drop in orders, simply because demand will drop dramatically.

Yu-Tai Tsai, head of statistics at the General Administration of Budget, Accounting, and Statistics, expects Taiwan's gross domestic product growth rate to fall to 3.06% in 2022 and 2.75% in 2023. However, these are only short-term problems for Taiwan's chip market.

With the recent passage of the U.S. CHIPS and Science Act by Congress (open in new tab), North America should see an influx of factories built in their own country; the $52 billion in subsidies will encourage more manufacturers to move to the U.S., potentially taking more Taiwanese business. Europe is also offering its own incentives, and Taiwan has announced several tax breaks, but has yet to offer subsidies.

Of course, we will have to wait and see how this plays out in practice to see how Taiwan will be hit by this. As a chip-producing powerhouse, it is hard to imagine Taiwan falling into such a situation. However, if you are looking for a new career as the West struggles to ride the semiconductor wave, and with the shortage of semiconductor technology (opens in new tab), becoming a chip engineer may not be a bad option.