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Taiwan’s Covid-19 Crisis Threatens Global Chip Supply

Taiwan’s Covid-19 Crisis Threatens Global Chip Supply

Having successfully kept the Covid-19 pandemic under control for over a year, Taiwan, the world's largest semiconductor producer, is seeing a sudden surge in infections, which may worsen the global chip shortage.

Until early May, Taiwan had recorded zero cases of community transmission of coronavirus for eight months, but there has since been an exponential rise in cases threatening to trigger a lockdown.

With only 1% of its population vaccinated and vaccine stocks fast depleting, Taiwan’s government now faces a health emergency, with the potential to disrupt the chip industry that dominates its economy and which is critical to an already crippled global supply.

Political tension between China and Taiwan is aggravating the problem. In February, Taiwan’s health minister accused China of trying to derail Taiwan’s plan to buy 5 million doses of the Pfizer/BioNTech Covid-19 vaccine directly from Germany’s BioNTech. China, he suggested, was putting Taiwan under pressure to purchase the vaccines from a Chinese firm that had exclusive rights to manufacture the Pfizer vaccine in the nation. China maintains that Taiwan is playing political games and putting the lives of its own citizens at risk by refusing to agree.

However, by shunning vaccines from China and warning of more chip shortages if sufficient doses cannot be obtained elsewhere, Taiwan’s government is providing an even stronger incentive for the world's largest economies to invest in their own chip infrastructures, which may weaken Taiwan's competitive edge in semiconductors in the long run.

In a bid to ease the situation and keep businesses running smoothly, sources say that key Taiwanese tech companies are attempting to purchase vaccines. Key Apple supplier Foxconn is in talks with vaccine manufacturers to procure doses, while others are leveraging their contacts to secure surplus doses from overseas. According to reports, the plan is to donate the majority of the vaccines to the government, while using the rest to vaccinate their employees.

"The plan is to reserve about 10% of vaccines that are purchased for internal use and donate 90% to the government to help solve the problem as early as possible," a tech executive commented. "However, there are still regulatory hurdles, as vaccines are vital medical supplies and need to be approved by the government."

These latest events unfold as Taiwanese semiconductor companies have already been tackling a slew of other difficulties including droughts, water shortages, power outages, manpower shortages and soaring transportation costs due to container shortages.


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