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China Is Buying Up Computer Chips Made in Taiwan

Flags of Taiwan and Taiwan Semiconductor Manufacturing Co (TSMC) are displayed next to its headquarters in Hsinchu, Taiwan October 5, 2017. (REUTERS/Eason Lam)
Flags of Taiwan and Taiwan Semiconductor Manufacturing Co (TSMC) are displayed next to its headquarters in Hsinchu, Taiwan October 5, 2017. (REUTERS/Eason Lam)
China Is Buying Up Computer Chips Made in Taiwan
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Taiwan’s exports are growing at a time when the world economy is shrinking because of the COVID-19 health crisis.

Taiwan reported a six percent jump in exports from July through September of this year. Experts say the jump is most likely a result of increased orders from technology businesses in mainland China. They say Chinese technology companies are buying up computer chips, or semiconductors, made in Taiwan.

Taiwanese factories produce some of the world’s top computer chips. But during the past four years, Taiwan has pushed companies to depend less on the Chinese market.

Taiwan and China have been locked in a political dispute for over 70 years. The two sides separated in 1949 when the Chinese Communist Party took control of the mainland and the Nationalist Party moved to Taiwan. China claims sovereignty over the island. But Taiwan rejects the mainland’s call for unification.

Now, China wants to develop the latest telecommunications technology, known as 5G. It also wants to be a powerful force in the technology field worldwide.

Alicia Garcia Herrero is chief Asia-Pacific economist with the French investment bank Natixis. Of Chinese companies, she said, “They know they’re not yet able to produce at least the highest-end semiconductors needed for 5G.” She added that Taiwan makes top level semiconductors and is unlikely to give up as a leader in the field.

Technology equipment is Taiwan’s top export to China. Information and communication technology products make up half of Taiwan’s total exports. Between July and September, $27.2 billion of Taiwan's $90 billion in exports went to China. Those numbers come from Taiwan’s Bureau of Foreign Trade.

Chinese importers bought more than one-third of the $32.9 billion in exports from the grouping of products that include semiconductors.

Taiwan’s government-supported Central News Agency says September export data showed “rush shipments” from Taiwan to two major Chinese companies. They are Huawei Technologies and China’s biggest chip factory, Semiconductor Manufacturing International Corporation.

Taiwan Semiconductor Manufacturing Company Limited (TSMC) is the world’s largest contract chipmaker. From July to September of this year, 22 percent of the money TSMC earned came from China, a company official said.

Exports fueled Taiwan’s economic growth in the same three-month period, rising 3.3 percent compared to the period last year. The government is predicting a growth rate of 1.56 percent this year. Both these numbers stand out because the International Monetary Fund predicts the world’s economic activity will fall 4.9 percent this year.

Brady Wang works in Taipei for the market intelligence business Counterpoint Research. He told VOA, “A lot of these goods are being sold in China because China is actually stockpiling inventory…”

Wang said the reason for the move was the state of relations between China and the United States. The two sides have been involved in a trade dispute for more than three years. The U.S. government also considers Huawei a security threat.

“The reason for stockpiling is the recent state of Sino-U.S. relations -- not just Huawei,” Wang said.

Chinese businesses traditionally look to California’s Silicon Valley for the latest in technology.

Last Tuesday, Huawei Technologies released a statement about the sale of part of its smartphone business. The company said sale of its products to the public have been “under tremendous pressure” because of a lack of “technical elements needed” for its mobile phone business.

Chinese tech companies are trying to depend less on foreign suppliers and ideas. They describe this as a move toward self-reliance.

China eventually hopes that it can make everything it needs within its own borders, Wang said. But he said it will depend on foreign ideas and supplies for some time.

“Self-reliance from China doesn’t mean full self-reliance because they’re not yet ready and I think that’s going to boost in a way that semiconductor industry even further in Taiwan,” noted Garcia Herrero.

I’m Mario Ritter, Jr.

Ralph Jennings reported this story for VOANEWS. Mario Ritter Jr. adapted it for VOA Learning English. George Grow was the editor.


Words in This Story

stockpiling – v. to get and keep a large supply of something for future use

computer chips – n. a computer part that contains many electronic circuits

lock v. to restrict or secure something

sovereignty – n. the independent ability to govern oneself

rush – v. to move to do something quickly or in a hurry

inventory – n. a supply of goods that are stored in a place

tremendous –adj. very large, very great or to a great amount

reliance – n. dependence on or trust in something

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