China-Taiwan tussle may further impact delivery timeline of your new car

If the Covid-19 pandemic and the Russia-Ukraine conflict weren't already creating enough havoc in the automotive world, a new threat has emerged which could possibly impact vehicle manufacturing across the world even more. The recent rise in tensions between China and Taiwan after the visit of US House Speaker Nancy Pelosi to Taipei could threaten chip manufacturing companies in Taiwan if the situation degenerates into an all-out conflict.

Semiconductor chip are a key component of modern-day consumer electronic items as well as new-age vehicles. But there has been a prevailing shortage for around two years now and this has hampered supply and manufacturing work processes globally. Taiwan has a key role to play here because a number of chip-manufacturing facilities are located here. In case of a military conflict, however, operations at these facilities could be severely impacted.

Take the case of Taiwan Semiconductor Manufacturing Co Ltd or TSMC, the world's biggest contract chip maker and Taiwan's most-valuable company that has already warned that if tensions with China escalate, operations could be rendered ‘non-operable.’ Mark Liu of TSMC recently said in an interview to CNN that if China invades Taiwan, the TSMC won't be able to operate because it relies on global supply chain. And this could have a far-reaching impact on production of not just consumer electronics but on vehicles too.

But it isn't just TSMC that could be impacted and the consequences could be far reaching for peers like United Microelectronics Corp, ASE Technology, MediaTek, AU Optronics, among others.

Here in India, the Federation of Automobile Dealers Association (FADA) has already issued a word of caution. “After Russia- Ukraine war, the world is once again facing the threat of Taiwan- China war. Due to this, the threat of semi-conductor shortage is once again looming as chip-maker TSMC raises red flag that if war hits," said Vinkesh Gulati, President of FADA.