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Semiconductors
Tech

Global chip shortage: Taiwan promises to keep the world supplied with chips as wait times approach the ‘danger zone’

  • Taiwan has revised down its GDP estimates for the year as Covid-19 cases continue to grow
  • Chip lead times, the gap between ordering and taking delivery, increased to 17 weeks in April, an indication that desperation is setting in

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Vehicles travel past the Taiwan Semiconductor Manufacturing Co. headquarters in Hsinchu, Taiwan. Photo: Bloomberg
Bloomberg
Taiwan’s government pledged to try to keep the world supplied with chips even as Covid-19 cases escalate, while anticipating a limited impact from its worst outbreak so far.

If only domestic consumption is hit, and the outbreak ends by June 30, gross domestic product growth may be cut by 0.16 percentage points, National Development Council Minister Kung Ming-hsin said at a briefing in Taipei on Tuesday. If the outbreak extends into the third quarter, the hit could be 0.53 points. But the economy could still expand over 5% this year, said Kung, whose agency isn’t responsible for assessing GDP.

The government in February raised its forecast for GDP growth to 4.64%, betting that a global scramble for semiconductors will boost exports. But that was before an explosion of coronavirus cases this month, compounded by the impact of a worsening drought and periodic power cuts.

US officials and executives have voiced concerns about the world’s dependence on chips from the island, which hosts the highest-end facilities of industry linchpins Taiwan Semiconductor Manufacturing (TSMC) and ASE Technology Holding.

Taiwan, which added 240 locally transmitted cases on Tuesday, has closed schools, curbed social gatherings, and shut many adult entertainment venues, museums and public facilities. Businesses and factories are operating, but the government has required them to allow parents to take time off to care for their children, and to ensure adequate social-distancing and masks.

“The impact on consumption is obvious, because restaurants and the service sector have been required to observe more strict social-distancing,” said Rick Lo, Fubon Financial Holding’s chief economist. “In manufacturing, for now it’s still safe, but if the situation gets worse then workers might not be able to work in the factories. The downside risk is increasing and it really depends on how quickly the outbreak is controlled.”

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