September 28—Wang Mei-hua, Taiwan’s Minister of Economic Affairs, announced her region’s semiconductor sales would reach NT$3 trillion ($102.9 billion) in 2020. If the island reaches that goal, its electronic components revenue will rise by 13 percent from last year’s total of NT$2.7 trillion ($91 billion).
The politician also stated that Taiwan is on track to generate NT$5 trillion ($171.7 billion) in chip sales by 2030.
How Taiwan Sold $102.9 Billion in Semiconductors this Year
The region’s staggering 2020 electronic components income is attributable to the technological sophistication of its electronic components makers.
Wang explained the island is a world leader in the development and production of 5G and artificial intelligence (AI) chipsets. As both technologies have seen a spike in demand because of the coronavirus pandemic, Taiwanese chipmakers experienced a surge in revenue. In fact, she revealed the area exported NT$31.1 billion ($1.06 billion) in semiconductor products in August alone.
The Taiwanese Semiconductor Manufacturing Corporation (TSMC), the republic’s leading chipmaker, posted second-quarter financial results that support Wang’s assertion. The firm grew its Q2 revenue by 28.9 percent year-over-year, which it attributed to strong demand for 5G and high-performance computing (HPC) components. The foundry also stated end-market interest in those segments would buoy its third-quarter income.
In addition, the Taiwanese government announced it created an NT$10 billion ($334 million) incentive program to attract foreign chipmakers. The East Asian state offered to subsidize up to half of an electronic components company’s research and development costs if they built new facilities on the island. Taipei hopes the program will bring NT$40 billion ($1.3 billion) in new capital to the island.
Mounting Headwinds Fuel Taiwanese Component Industry Growth
Another factor driving Taiwan’s ascent in the global semiconductor industry is the U.S. trade war. Corporations like Apple have recently expanded their Taiwanese production capacity to avoid electronics tariffs issued by the two superpowers.
Liu Pei-chen, a researcher at the Taiwan Institute of Economic Research, predicts the U.S. government’s new trade restrictions on the Semiconductor International Manufacturing Corporation (SMIC) will further aid local chipmakers.
Liu noted SMIC presently represents 4.5 percent of the global foundry market share. But with its access to certain technology now limited, the researcher expects other vendors to pick up its lost business. He specified United Microelectronics Corporation (UMC), Macronix, Winbond, Powerchip, and Vanguard International Semiconductor Corporation could fill SMIC’s absence.
The combination of technological leadership, financial incentives, and trade headwinds are having a transformational impact on Taiwan. The East Asian state is already a font for semiconductor design innovation and contract chip manufacturing. But current marketplace conditions could make the region the global leader in electronic component development.