A China-Taiwan conflict could lead to a catastrophic semiconductor shortage in the world

Pelosi is expected to spend the night in Taiwan’s capital, Taipei, on Tuesday, August 2. She had been warned not to do so by officials from China, who claim sovereignty over the self-governed island.

While the loss of life would clearly be the worst consequence should conflict break out, the heightened tensions also highlight the world’s incredible reliance on Taiwan for semiconductors. It’s an issue that is especially prescient given the ongoing global impact of the Russian invasion of Ukraine — such as an impending gas crisis in Germany due to pressure on Russia’s gas supply.

The World’s Reliance on Taiwan’s Semiconductors

The effects of the global chip shortage last year underlined the dependence of the world economy on Taiwan. The shortage of semiconductors had enormous consequences for the automotive industry, for example, forcing many large companies to stop production.

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