Information Technology (IT) manufacturers have experienced global microchip supply chain shortages since 2020. (See reasons for shortage.) The need for continued access to information technology hangs in the balance of China & Taiwan relations.
Why Does China Want Taiwan?
China and Taiwan have a rich and complex history dating as far back as 230 AD. After defeat by the Communist party in the 1949 Chinese Civil War, the Chinese Nationalists moved their capital to Taiwan and established their own government. Since then, China has viewed Taiwan as a “breakaway province” that will eventually be back under the People’s Republic of China. At least, this is the official stance of Xi Jinping, President of the People’s Republic of China.
However, the more nefarious reason China seeks control over Taiwan is to become a great superpower. Taiwan’s geographic position makes them a prime target for anyone seeking power over eastern Asia, and whoever controls Taiwan strategically controls the Pacific Ocean through trade, military, technology, and financial strength. Recent military exercises and increased arms support the belief China is gearing up to take back control of the small islands. China’s obsession with Taiwan is why we see them flex their military muscles toward anyone who recognizes Taiwan as an independent country.
China-Taiwan War Will Significantly Impact the Technology Industry
It may surprise you that the Taiwan Semiconductor Manufacturing Co. (TSM) produces 92% of sophisticated microchip production worldwide. Microchips are tech gold for products with built-in electronics like smartphones, personal computers, servers, smart devices, and cars, to name a few. Sophisticated chips are in such high demand because their transistors that are less than one thousand widths of a human hair. For example, roughly 1.4 billion smartphones sold worldwide have TSM chips. The rest of the sophisticated chips are made by Samsung Electronics Co. headquartered in Seoul, South Korea.
In addition to their sophisticated microchips, TSM accounts for 56% of microchips made for very specific products. When you combine both types of microchips produced by TSM, they are the largest chip producer in the world for simple, complicated, and technology bound microchips.
Unfortunately, microchips are difficult to make. The purification needed for semiconductor technology requires 160 times the amount of energy to make a simple microchip. TSM has spent years mastering microchip production and it will be difficult, if not impossible, for any country to catch up with them anytime soon.
Russia-Ukraine War is a Chrystal Ball into the Implications of a China-Taiwan War
The supply chain impact from the Russia-Ukraine war provides a crystal ball into the devastating consequences of a China-Taiwan war. Russian and Ukraine make up a significant percentage of wheat (25% combined), oil (13%), and fertilizer (15.9%), which has resulted in a global supply chain food and energy crisis.
If China invades Taiwan, there will be very little, if any, sophisticated microchip production coming out of Taiwan. During war, most technology manufacturing will come to a grinding halt as they compete for the remaining 8% of the sophisticated microchips produced globally. In addition, refurbished computer equipment will skyrocket in cost, and used equipment will go up in price significantly. Unfortunately, the microchip crisis is well underway since the pandemic, but it will get much worse if China Attacks Taiwan.
Why is this a Problem for the United States IT Profession?
Every person in the United States who depends on electronics for transportation, communication, utilities, or health will be impacted. For example, the average car can take up to 3000 microchips. And IT supply chain shortages would affect every business that is technology dependent. Without a doubt, there will be fewer opportunities to upgrade, replace, or obtain new computer equipment without microchips. Unfortunately, microchips cannot be mined and reused, which leaves us short of a solution.
Most importantly, our military will be hindered if we cannot manufacturer new military equipment or keep our information technology up to date. This is most likely our biggest threat.
What is the Government Doing to Help?
The United States semiconductor position had declined since 1990, when we accounted for 40% of global production, to now when we are producing only 11%. The reason for the decline is the cost and expertise required to manufacture microchips. As a result, US manufacturers that purchase microchips in large quantities decided to outsource this to other countries.
In 2021 Congress authorized a set of programs known as the Creating Helpful Incentives to Produce Semiconductors for America (CHIPS) as part of the William M. (Mac) Thornberry National Defense Authorization Act (NDAA). This bill seeks to restore the US as the leader in microchips by 2026 by giving US manufacturers $50 billion in government incentives. Unfortunately, these incentives are too little, too late if it takes five years to correct and China attacks Taiwan in the interim.
Managed Service Providers Are the Key to Extending the Life of IT Equipment During a Chip Shortage
The IT profession has been recession-proof in the last 30 years. However, in a situation where the availability of chips is low and there is no immediate solution in sight, the goals of IT will significantly change from innovation to maintenance, security, and sourcing.
Onsite Preventive Maintenance
Onsite preventive maintenance will significantly decrease downtime by providing a more secure, efficient, reliable, and healthy network. The word “Onsite” is the key between a typical managed service provider (MSP) and a great managed service provider because there are so many things that can go wrong in the server room that cannot be ignored.
Security
Cybersecurity will be the primary focus in a world without readily available computer chips. Oftentimes, the cost to fix a virus is more expensive than the cost to replace it. However, in a time such as this, the focus will be to prevent cyber attacks in the first place.
Sourcing
The buying power of an MSP is stronger than an individual company. In a time where new computers are hard to find, and MSP can help find used equipment to replace your legacy systems.
Summary
Undoubtedly, the United States will be at an extreme disadvantage if China takes over TSM in Taiwan. It is clear our government needs to do more to quickly bring microchip manufacturing back home to America – not five years from now.
A mature Managed Service Provider (MSP) can help you through this crisis by implementing a series of monitoring, preventive maintenance, updates, cybersecurity, and using experienced sound judgment.
About INSI
Innovative Network Systems, Inc. has a unique approach to integrating IT support and cybersecurity. Our month-to-month programs range from basic support to proactive support, managed support, and customized support. Each program is tailored to the client’s needs and internal IT strengths.
For more information about cybersecurity dangers and the preventative measures for your company, connect with the top MSP in Atlanta; Contact INSI: 770-387-2424, option 2 or click the link below. In addition, we offer 16 different cybersecurity programs to protect you and your data.
About the Author
Deborah Frazier is the author of IT Outsourcing Secrets – A Small Business Guide to Compare IT Support Companies. With nearly 20 years of experience consulting small and medium-sized businesses on their IT support needs, she brings a wealth of knowledge to INSI as Head of Marketing and Sales. If you like this article and would like to get notified when a new article is posted, click here.
