The 7.5 magnitude earthquake, that came to pass of the coast of Taiwan, not only wrecked regions on the island nation, but also has raised concerns over the larger global supply chain being affected. Taiwan and some of its marquee companies manufacture a product, that in many ways acts as the fulcrum of the world, we know today, semiconductors.
The Chips That Rule The World
Semiconductors or chip are crucial not only because of their advanced tech or supposed sophistication, but also because of their spread and influence in today's world, where every crucial aspect from your smartphone to smart EV runs on these small yet mighty instruments.
Taiwan manufactures over 60 per cent of these chips in the world. And TSMC or the Taiwan Semiconductor Manufacturing Company makes 61.2 per cent of chips in the world. PSMC, another company from the Southeast nation contributes to the world with 1 per cent of the world's production.
As a result of these configurations, anything that comes to pass in this part of the world could have far-reaching consequences in the world.
The Consequences of a Disruption
In the earthquake, a TSMC plant was also affected, in fact, TSMC evacuated its workers, when the whole world around them was shaking. With the recent AI boom, the role of chips as only burgeoned further. TSMC is the leading contract chipmaker serving tech giants like Apple and NVIDIA.
Apart from the stalling of operations, it also remains to seen as to what physical damage the manufacturing system has incurred, which in turn could result in losses for the company, but also affect future manufacturing activities.
This could have a trickle effect on the semiconductor supply chain, and in turn affect the manufacturing of products. Advanced research and development in AI-driven tech sector will also take a hit. This would make the supply of these modern day gems scarce, thereby, increasing the relative demand. This would eventually lead to an increase in the prices of these chips.
And as the chain continues, this increased cost will strain manufacturers, before they pass the added cost on to their customer, thereby surging the prices of commodities, that over the year, has become crucial and perhaps indispensable in the modern world.
