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Walking a tightrope (4): Geopolitical risks

Colley Hwang, DIGITIMES, Taipei 0

Credit: DIGITIMES

To avoid the air spaces being affected by Russia-Ukraine war, the planes of Japan Airlines and Korean Airlines may reroute to Alaska and Canada, which may not only add four extra hours of flight time, but also make Alaska a new stopping and refueling point. The cost of the detour is even more obvious in the era of high oil prices, and this cost will be borne by everyone.

In addition, taking sides has become the biggest risk for enterprises. Whether it's companies pulling out of Russia in the wake of its invasion of Ukraine, consequences in the wake of the US-China trade war, we've seen that ideology can be another business variable. Huawei, DJI and SMIC have been blacklisted by the US. Elon Musk's bid to acquire Twitter has sent many wondering whether his company, Tesla, which relies heavily on the Chinese market, will be influenced by China in its Twitter operations. They also have concerns about the ownerhsip of data Tesla collects from China.

Everyone agrees that "geopolitical" risk is probably the biggest risk for Taiwan and a potential difficulty for Taiwan in expanding business opportunities and industrial influences. But the semiconductor industry in Taiwan is looking good, and there is room for Taiwan to gain a foothold in the supply chain for electric vehicles (EV). Not long ago, a major country's ambassador in Taiwan asked me what it would take to create a win-win situation for both countries.

I replied that his country has a very strong automobile industry, and the automobile industry is undergoing transformation. First, the traditional automotive supply chain needs Taiwan's semiconductors, display devices and optoelectronic components, and both countries can work on setting up a summit of new-generatin carmakers from both sides.

In the past, his country's auto parts suppliers may have seen Taiwan as a competitor, but in the matrix-type of industry structure, coopetition is becoming blurred, and automobiles are just mobile computers on wheels. I told hims that his country is not the only country in the world that has an automotive industry, and Taiwan has many options, and that the best bet for his country is Taiwan.

Secondly, the future of EVs will not be concentrated in the traditional automotive powers of the past; Vietnam, Indonesia, Thailand and India will not miss this opportunity. I know too well the advantages of Taiwan's supply chain, from capital advantage to mass production, and it does not make mistakes easily. Taiwan will be an irreplaceable strategic partner in the next generation of EV business opportunities.

The third is the exchange of talent, encouraging more new-generation semiconductor engineering talent to work in Taiwan. Whether in manufacturing or design, Taiwan is the best place to cultivate industrial experience.

For Taiwan, what is clear is the geopolitical risk, but what is uncelar is its difficulty in international cooperation. Unless there are special considerations, multinational companies will not openly support Taiwan. The alienation of the international environment has distorted Taiwan's industrial and economic policies and international perspective.

I have been encouraging Taiwan to go easy on its technology policy for the next 10 years, helping other countries build up their EV industry, bringing in as much talent as possible frm other countries for Taiwan's semiconductor and ICT industry supply chain, and truly implementing Taiwan's strategy of being a harmless partner. When the world is at a turning point, it would be stupid to lock up the country or wait and see what happens.

Colley Hwang, president of DIGITIMES Asia, is a tech industry analyst with more than three decades of experience under his belt. He has written several books about the trends and developments of the tech industry, including Asian Edge: On the Frontline of the ICT World published in 2019, and Disconnected ICT Supply Chain: New Power Plays Unfolding published in 2020.
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