China's Semiconductor Exports Decline, Increasing Possibility Of Taiwan Invasion

US Senate Majority Leader has also proposed a Chinese semiconductor ban so that economy depends on American-Made Microchips, which could make an Invasion Of Taiwan by China more tempting | Image credit - Donald Standeford.

By Donald Standeford, SJ Founder/Publisher
December 03, 2022 04:00 am UTC
Modified: 2022-12-03 04:00 am

BEIJING - China's semiconductor exports declined by 26.7% from a year ago, with the largest one-month decrease recorded for the month of October, at 22.5 billion units, according to data released by the National Bureau of Statistics (NBS).

US Senate Majority Leader has also proposed a Chinese semiconductor ban so that economy depends on American-Made Microchips, which could make an Invasion Of Taiwan by China more tempting.

The shortage has gotten to the point where a woman was arrested last week by Chinese customs officials after she attempted to smuggle semiconductor chips into Zhuhai, China from Macaus underneath a false pregnancy bump.

A calculating China would likely only carry out an invasion of Taiwan if the benefits of an invasion outweighed the risks involved in doing so. A severe microchip shortage may end up pushing China to follow through with the decision to take the island over in order to control its microchip industry.

The decline in the month of October was even lower than the 25.9 billion units produced in April when Covid-19 lockdowns interfered with manufacturing efforts and the month of August saw a 24.7% decline.

The decline is partially due to weaker demand as a result of weakening economies globally, and partially due to new export controls put in place by the United States in early October.

Citadel CEO Ken Griffin expressed some concern not only regarding America's dependence on Taiwan's semiconductor industry but also that restrictions put on China regarding selling advanced microchips might create a situation in which invading the island of Taiwan becomes even more tempting.

Controlling the island of Taiwan, which accounts for 92 percent of the production of the world's most advanced semiconductors (below 10nm), would allow China to dominate the global microchip market, but even before China had the chance to dominate the market, a prolonged war with Taiwan would cease microchip production for the duration of the war, causing a global chip shortage.

Regarding America's dependence on Taiwanese microchips and semiconductors, Griffin was cited by Fortune as saying, “If we lose access to Taiwanese semiconductors, the hit to U.S. GDP is probably in the order of magnitude of 5% to 10%. It’s an immediate Great Depression".

He also said, “You can argue that by depriving the Chinese of access to semiconductors, we up the risk that they seize Taiwan .”

In August, the Biden Administration announced the CHIPS Act, which invests $50 billion in the domestic US semiconductor industry, in order to "revitalize the domestic semiconductor industry and spur innovation while creating good-paying jobs in communities across the country," according to U.S. Commerce Secretary Gina Raimondo.

After announcing the plan, U.S. Commerce Secretary Gina Raimondo told reporters, "With this funding, we’re going to make sure the United States is never again in a position where our national security interests are compromised or key industries are immobilized due to our inability to produce essential semiconductors here at home".

"Through the CHIPS for America Act, @POTUS has made it clear that the U.S. must lead the world in the production of semiconductor chips." The White House had stated on Twitter at the time.

Senate Majority Leader Proposes Chinese Semiconductor Ban Amendement

WASHINGTON - Senate Majority Leader Chuck Schumer and Republican Senator John Cornyn have proposed a U.S. government ban on doing any business with companies that use semiconductor products that the Pentagon believes are made by Chinese military contractors.

He is currently attempting to persuade Congress to pass his proposal on the ban.

“If American businesses want the federal government to buy their products or services, they should not be using chips made in China that put our national security at risk because of Chinese government involvement,” he told the Senate after Thanksgiving recess. "We need our government and our economy to depend on American-made chips."

The proposal would be an amendment to the National Defense Authorization Act (NDAA), and would expand an existing ban on the government's use of Chinese chips.

The report says that the 2023 National Defense Authorization Act will authorize over $800 billion in spending.

Schumer said, "We need to be tough on the Chinese government and its actions."

China's semiconductor exports Declined in October by 26.7% from a year ago, with the largest one-month decrease recorded for the month of October, at 22.5 billion units, according to data released by the National Bureau of Statistics (NBS).

The decline is partially due to weaker demand as a result of weakening economies globally, and partially due to new export controls put in place by the United States in early October.