October 6, 2022

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“Escalation of conflict would be disastrous for Germany”

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including: Sven Hauberg

Is the Taiwan conflict too far away? No way: Germany will also feel the effects of the escalation. A “super meltdown” is brewing.

Munich/Taipei – Nancy Pelosi Departed from Taiwan. On Wednesday afternoon (local time), the Speaker of the US House of Representatives boarded a plane in Taipei that was to take him to South Korea. However, the Taiwan conflict is far from over with the 82-year-old’s departure. Beijing has announced extensive military maneuvers around the island in the coming days, and observers agree: One day there will be China Beijing is seeking to “reunite” the democratic country with the communist mainland, which it considers a “breakaway province”.

have consequences The escalating Taiwan conflict Especially for the small country’s nearly 24 million people. But if China attacks, the global economy will also be badly affected. “The situation around Taiwan worries me about the global economy – but also the German economy – for some time now,” says Sebastian Tullien, director of the union-affiliated Institute for Macroeconomics and Business Cycle Research (IMK). Hans Bachler Foundation. “If you look at where semiconductors and other primary products are produced, what the supply chains look like, an escalating conflict would be devastating for Germany,” Dallian said. Merkur.de from IPPEN.MEDIA.

TSMC, the world’s largest independent contract manufacturer of semiconductors, is headquartered in Taiwan — more precisely in Hsinchu, a city of 450,000 people in the northwest of the country. Chips manufactured by TSMC are among the best the market has to offer. . And they’re in countless products we use every day: iPhones and other cell phones, elevators and food processors, cars and televisions. “TSMC is systemically important,” said Wan Chin-Liu, an economist at the Kiel Institute for Global Economics. Merkur.de from IPPEN.MEDIA. “If TSMC can no longer export its chips, it will affect global supply chains, but also the stability of the global economy in general.” This is one of the reasons Pelosi visited TSMC after her political meetings to meet with CEO Mark. Liu.

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That IPPEN.MEDIA NETWORK One of Germany’s largest online publishers. Journalists from our central editorial offices in Berlin, Hamburg/Bremen, Munich, Frankfurt, Cologne, Stuttgart and Vienna investigate and publish more than 50 stories. These include brands such as Merkur.de, FR.de and BuzzFeed Germany. Our news, interviews, analysis and opinions reach more than 5 million people in Germany every day.

The Taiwan Conflict: The West Dependent on Chips in the Far East

TSCM specializes in making very small and very powerful chips. Experts are talking about chips with very small configuration widths. At 5 nanometer structure width, TSCM is already ahead of Samsung’s South Korean competition; Earlier this year, the Taiwanese wanted to produce even smaller chips that could be installed in Apple products first. With Taiwan no longer able to export these semiconductors – for example because China has cut off trade routes – German consumers will soon feel the effects. The industry is already complaining about a shortage of chips, although the decline in demand from private households has temporarily eased the situation recently.

Do you really want China? Taiwan You can’t accept the attack, of course, says Sebastian Tullien of the Hans Bachler Foundation. “The question is: How do you deal with it?” If the West were to issue sanctions against China, it would be a “massive economic shock”, especially since China could react with counter-sanctions. “The latest generation of semiconductors are only made in Taiwan and South Korea, so we’re going to have a really big problem. It’s going to be a huge collapse for the global economy. The dependence on Taiwanese chips is just as high, so it’s going to be a super disaster with the announcement.” Like Russian gas.

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In late July, Taiwan rehearsed the emergency during annual military exercises. © Sam Yeh/AFP

Europe and the US are trying to promote domestic semiconductor production to reduce their heavy dependence on DSMC and other manufacturers in the Far East. This is partly done in cooperation with manufacturers from Taiwan and South Korea. “However, it is still not clear how this could ultimately work,” says expert Liu. Either way, the EU could launch a “European Chip Act” as early as 2023, a plan worth billions to encourage domestic semiconductor manufacturing. Intel wants to build its new semiconductor plant in Magdeburg early next year, and Bosch wants to invest three billion euros in its semiconductor business by 2026. However, EU countries still need to agree on a common position, which could happen as soon as December.

The U.S. wants to become more independent from China — and encourage chip manufacturing in its own country

The America There are already more. Congress passed the CHIPS Act a few days ago. An estimated $52 billion will be pumped into U.S. semiconductor manufacturing over the next few years. The law is aimed at China: Manufacturers who want money from the subsidy pot must not ramp up production of modern chips in the People’s Republic. Because China is also trying to become a semiconductor superpower. And making amazing progress. Chinese chip manufacturer SMIC has recently succeeded in producing high-quality 7-nanometer chips. Years of development deficits can be compensated this way: a year ago, the company produced only 14-nanometer chips.

China’s rapid gains worry the US. In early July, it became known that Washington was pushing the Dutch government to ban ASML from selling semiconductor technology to China. ASML manufactures chip manufacturing equipment that Chinese manufacturers cannot do without. Especially in the field of UV lithography, which requires super-narrow structure widths, there are no real alternatives to Dutch production facilities.

The situation in the Taiwan Strait remains calm. But China’s planned military maneuvers in the region starting Thursday are already causing unease among shipping companies. noise Bloomberg Many gas suppliers are currently looking for new routes for their LNG carriers that do not interfere with China’s military exercises. If ships had to go around the island to the east without going through the strait between China and Taiwan, it could take up to three days.

Is China attacking Taiwan – or just imposing sanctions?

If the conflict escalates, only Taiwan and the West will suffer. The economic costs will be enormous for China. Despite all the tensions, trade between Beijing and Taipei is booming, and Chinese manufacturers rely on Taiwan’s semiconductors. Both countries are trying to reduce their mutual dependence, but have not succeeded so far.

“China says it will bear the economic costs of a conflict with Taiwan no matter how high it is,” said Wan-hsin Liu, a Kiel-based analyst. of Pelosi visits That is not reason enough. However, if the independence debate gains momentum in Taiwan, “the situation could worsen: the Chinese government could actually say: China is willing to do whatever it takes to prevent Taiwan’s independence, even at high economic costs.”

Liu believes Beijing will do everything it can to minimize the damage to its own country. Instead of invading Taiwan, the People’s Republic could impose targeted sanctions on Taipei. Beijing took the first steps in that direction on Tuesday when it banned imports of Taiwanese products such as seafood, tea and honey. “Taiwanese products that China absolutely needs and cannot produce itself can be excluded. China has a certain amount of flexibility and can assess how badly its own companies will be affected. It would be easier to control that than a military attack against Taiwan.” But, he says, “we’re not there yet.”

Collaboration: Fabian Hartmann