If Taiwan were to shut down, the cascading effect could be disastrous for the world economy.
An extract from his report that highlights the role played by the island in the global supply chain was announced on August 21.
China has continued war games and military drills around the island following US House Speaker Nancy Pelosi’s visit to Taipei at the beginning of the month that infuriated Beijing, which claims Taiwan as its territory.‘Kya Lagta Hai -12’ was sent today to all our PMS members and the ‘BM Vision 2030 smallcase’ investors.
Extract:
‘Taiwan is only 1% of the global GDP but if it shuts down its shop the damage could be a complete global recession.’https://t.co/6ctAbLJggY
— Basant Maheshwari (@BMTheEquityDesk) August 21, 2022
At a time when Taiwan is making moves to insulate itself from China's influence in manufacturing businesses, a statement like this shines a light on the dominance of Taiwan in this area.
Taiwan may end a chip deal with a Chinese company.
There is a conflict.
Tensions in the region went up after Pelosi visited Taiwan. China banned agricultural exports and conducted military drills off the island in anger.
A world leader in chip making.
Taiwan is the world's largest producer of chips, accounting for 65 percent of the global supply. Taiwan makes the majority of advanced chips.
The world's largest chip manufacturing company, Taiwan Semiconductor Manufacturing Company (TSMC), is located on the island and has a market share of over 50%.
The inventory of TSMC was equal to 40% of the revenue at the end of the second quarter. Its competitors had a figure of over 50 percent.
The global economy is being warned on by chipmakers.
There are counter measures in place.
Taiwan is beefing up its defence even though the Chinese military is off the coast. Taiwanese officials may try to force Hon Hai Precision to end its deal with Tsinghua Unigroup.
In July, the world's largest contract electronics maker raised eyebrows when it revealed it owned 20% of Tsinghua Unigroup through a mainland subsidiary. According to the company, the tie-up has been misinterpreted.
According to a report, Taiwan's investment commission, which reviews large deals in China, was irate and authorities were considering fining it up to T$25 million.
Taiwan is taking steps to protect its top engineers. Ten percent of the island's total supply has been lost to Chinese companies in the last three years.
Taiwanese companies are not allowed to send advanced chip-making to the mainland. Many global chip majors make chips in China.
TSMC has a plant in China that makes chips. There is a strong presence of other leaders on the mainland.
Few major chipmakers make their most cutting edge products in China. Taiwan is still the main supplier of high-end and basic chips for the US and China.
There is a chip crisis in the offing.
This uncertainty is bad for global markets.
North Asia's high-tech exporters have historically served as a bellwether for the international economy due to their high-tech products.
Across the East China Sea, TSMC has indicated that it expects investment outlays to go down.
Semiconductor inventories are at a record high, and the economic downturn won't change that. An increasingly tense environment and continued supply-chainfriction are dividing the largest from the rest, which could affect how well they survive.
As a result of the technology cold war between the US and China, expectations for how much product should be kept on the shelves have changed.
The industry leaders are enjoying more robust outlooks for their foundry services because they can offer clients superior manufacturing processes for higher end applications.
All this spending won't support earnings. The high rate of spending on new facilities heightens concerns that capacity will outstrip demand if a global recession hits and has led to a decline in the stock market.
The India-Taiwan agreement could be a game-changer for the Semiconductor Industry.
I can't afford another shortage.
There was a global chip shortage that hit various industries hard during the COVID-19 epidemic and the volley of US-China cross sanctions during the Trump era.
The supply chain would be disrupted and the production of electronic equipment would be affected by the shortage.
As expected, automobile production took a hit, with some domestic and global automobile manufacturers cutting output.
In August of this year, automobile wholesales in India declined by 11 percent.
The production of electronic devices was hit.
It's expertspeak.
In July, it was warned that global chip sales may contract in 2023. The firm expects chip sales to grow at a slower rate in the next two years than they did in the previous year.
Although chip shortages are abating, the global Semiconductor market is entering a period of weakness, which will persist through 2023.
Semiconductor end markets that are exposed to consumer spending are weak. Consumer disposable income is being put at risk by rising inflation, taxes and interest rates. Spending on electronic products is being affected by this.
Fearing that the world economy could continue to get worse, the projection for the revenue of chips has been lowered. chip revenue is expected to further contract in the years to come.
PC shipments are expected to fall by more than 10 percent in 2022. Revenue from chips related to phones is expected to grow at a slower rate in the next two years.
There is optimism on the domestic front, but the China- Taiwan tension looms.
It is thought that 20,000 on the Nifty would come before the next Independence Day.
The only caveat is that China and Taiwan should not start a war.
(With inputs from agencies)
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