Although I hope the situation will eventually reach a peaceful resolution, the dispute between mainland China and Taiwan looks very thorny. The recent elections have put both sides into highly posturing modes, and one side may go a bit further than it intended. The nonviolent dispute could even erupt into more than a war of words. If the situation does escalate, an armed conflict on Taiwan could take many lives and wreak havoc with many high-tech industries.
I'm not an alarmist and I don't want to create an industry panic. But the global semiconductor industry has evolved over the last decade. That area of the world hosts many companies that supply a significant portion of commodity components for consumer and personal-computer equipment, as well as customer-specific ICs. If the product streams were interrupted, the overall industry could suffer. Many components, such as DRAMs, SRAMs, computer motherboards, flat-panel displays, and others, come from factories in Taiwan. The 1999 earthquake showed just how vulnerable those factories can be.
If our worst fears come true and force is used to settle the disagreements between the two governments, what will be the cost? We can never sanction the human toll, and should always endeavor to avoid and minimize it. It seems very callous to look beyond that possible toll. Yet the question exists of how that conflict could affect the world economy. Companies in Taiwan supply many key semiconductor components to many critical industries—personal computers, communications, and even the fabless semiconductor companies. All could suffer significant business disruptions if the factories are damaged.
I guess the real question I'm formulating is, "Have we grown too dependent on outsourced manufacturing?" Years ago, the U.S. government was very concerned about allowing off-shore companies to supply critical components for military systems. Although that is still a concern, it seems to have migrated from major to minor. To mitigate the issue, the government set up various R&D consortiums. This ensured that some technologies, such as large-area flat-panel displays and advanced semiconductor manufacturing, could be done in the U.S.
In the commercial world, though, companies often look for the best price or proven volume manufacturing when selecting a supplier. This has led many fabless manufacturers to large foundries in Taiwan. Are we, as an industry, becoming too complacent about such a supply source in light of world turmoil? Are there enough alternate sources of supply should that connection be disrupted? If things get out of hand, many of the companies that depend on that area's foundries could suffer significant product shortages. What should the industry do to minimize such potential conditions? Send me your views.