The Banking Executive Magazine - September Issue 2022

modities, data centres hosting serv- ices, personal computers, energy, chemicals, and metals, as detailed below: Semiconductors • Taiwan is the largest producer of electronic chips, which are sup- plied to almost all the industries, from phones to laptops, watches to game consoles, industrial equip- ment to automotive, and aircraft and fighter jets. • TSMC (Taiwan Semiconductor Manufacturing Company) is the largest foundry in the world and holds around 65 percent of the global production of chips. • Any potential conflict with China would completely disrupt the en- tire supply chain of TSMC and labor availability, and could cause major shortage of electronic chips. • Additionally, China controls five percent of the global production of chips, which could also be af- fected. • This could further impact the al- ready existing supply-demand gap for electronic components. • At present, China can meet only 15-20 percent of the global semi- conductor demand, and relies on Taiwan and South Korea for most of its semiconductor chip imports and electronics manufacturing. • Since early 2021, Taiwanese com- panies started shifting from China, reportedly due to rising costs of doing business and trade tensions. • As part of the U.S. Strategic Com- petition Act of 2021, companies located in China—with a majority of U.S. clients—will need to diver- sify their supply chain. • In the long term, a decline in in- vestments and investment-led trade between Taiwan and China is expected, which would assist Tai- wan to secure a stronger supply chain position. Agro Commodities • Fresh fruits form the largest export category for Taiwan within the agro space. China buys over 80 percent of all the fruits exported, followed by Japan and Hong Kong. • In case of a war, Taiwan will not be able to export its fruits to China or any other country. There will be an over-supply of these fruits within Taiwan, which might result in wastage due to lagging infrastruc- tural support to store these fruits. Data Center Hosting Services Taiwan accounts for around 63 per- cent of semiconductor production in the world. With the Russia-Ukraine conflict already impacting the semi- conductor supply chain, as it hinders neon gas and palladium supply for semiconductors, any aggression over Taiwan would further affect the sup- ply of semiconductors for data cen- ters. The price of data center hosting serv- ices would escalate exponentially, possibly drawing parallel to the price the BANKING EXECUTIVE 42 ISSUE 165 SEPTEMBER 2022