Taiwan's chip sector is safe from homeshoring for now

Significance

Tensions around Taiwan spiked with US House Speaker Nancy Pelosi’s visit to the island last month. This reignited concerns about the implications of global dependence on Taiwan for such foundational technologies.

Impacts

• Tensions around Taiwan will not significantly affect the semiconductor industry’s international distribution in the short term.
• China will pursue measures to upgrade its domestic semiconductor industry; these are unlikely to include invading Taiwan.
• Taiwanese firms will benefit from US measures targeting China’s semiconductor industry, but also face pressure from homeshoring efforts.
• Washington will put more pressure on allied governments to cooperate on 'friendshoring' semiconductor industry initiatives vis-a-vis China.