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Taiwan Chip Industry to Win Big in Electric Vehicle Transition

Taiwan’s electronics companies, already making waves as the biggest exporter of chips to the world, are poised to take advantage of the global shift toward Electric Vehicles (EVs), industry observers noted.

Last year, Taiwanese companies raced to fill a huge car chip shortage created by pandemic complications. Although the island nation is considered the semiconductor capital of the world, Taiwan struggled to make a large footprint within the supply chain for internal combustion engine vehicles. Last year’s chip shortage has forced global carmakers to hit the brakes on production. But the opportunity for Taiwan’s semiconductor-makers in the electric vehicle market is gaining speed. With carmakers increasingly transitioning toward EVs, automobiles now require more electronic components than ever.

One consumer trend is pushing the adoption of electric vehicles faster. Consumers worldwide are more inclined to support more sustainable, smarter vehicles. On the other hand, such a growing demand has been further strengthened by the pandemic which saw an increased need for private transport.

While Taiwan’s semiconductor firms have supplied global automakers, the majority of their products are into consumer electronics. Thus, the biggest of the country’s chip manufacturers supply semiconductors for some of the world’s most sought-after consumer electronic brands.

But car companies worldwide know how crucial Taiwan’s role is in the future. So, while chips for cars only account for a tiny fraction of the overall sales of Taiwan’s biggest contract chipmaker, its role in the car supply chain was important enough for officials from the U.S., Germany, and other countries to ask Taiwan to up the production of less advanced silicon used in automobiles.

There is a steady ongoing worldwide shift happening towards EVs which in turn, has started to create better opportunities for other contract semiconductor firms in Taiwan. A host of Taiwan’s established firms have been filling up orders for electronic chips for one of the world’s leading electric car manufacturer brands based in America.

Consumer electronics, by definition, refers to any electronic devices designed to be purchased and used by end-users or consumers for daily and non-commercial/professional purposes. A common example of such are smartphones, computers, TVs and tablets. Globally, this market has been valued at USD 729.11 billion in 2019 but has been growing steadily through the years.

On the other hand, the global automotive manufacturing market was sized at about 2.7 trillion U.S. dollars in 2021. Also, the electric car market is valued at USD 370.86 billion in 2021, and it is expected to reach USD 1298.32 billion by 2027, growing at a Compound Annual Growth Rate (CAGR) of 23.35% over the forecast period (2022-2027).

The good news is local Taiwanese officials are eager to help companies gain a foothold within the EV supply chain as well. For example, the Tainan City Government is currently looking for suitable real estate within industrial parks to set up specialised zones for car electronics suppliers to construct offices and plants. Such government support is conducive. Greater cooperation between the public and private sectors is needed for Taiwan to move forward in its quest to cut a lion’s share in the EV market. But it’s not the first time that the government has worked with its business leaders.

While Taiwan is home to the world’s biggest chip manufacturer, various government efforts have been made to make the country a suitable source of chips for the planet’s biggest brands. A clear example is the Industry Technology Research Institute (ITRI), a non-profit research company funded by the government that has guided the country’s biggest semiconductor companies.

As reported on OpenGov Asia, ITRI has advised Taiwan’s chipmakers to look into robotics to make the most of another growing car manufacturing trend: Assisted Driver Systems (ADS).

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