Fri, Feb 02, 2007 - Page 11 News List

PRC military action could disrupt electronics supply

STRATEGIC ROLE The US-Taiwan Business Council said that supply of major electronics products could be affected if China were to resort to force against Taiwan


China's recent missile test raised new concerns that potential military action by Beijing to unite with Taiwan could cause disruption in the electronics supply chain in which Taiwan plays a strategic role, the US-Taiwan Business Council warned yesterday.

The non-profit organization made the remarks following China's recent destruction of a satellite using a ground-based medium-range ballistic missile, which also drew the world's attention to potential flashpoints and the possibility that China could resort to force over Taiwan.

"The global economy is increasingly reliant on the supply chain synergies driven by Taiwan and its regional partners," council president Rupert Hammond-Chambers said in a press release yesterday.

"The present trends point towards Taiwan increasing its supremacy in certain key sectors, particularly in semiconductors," Hammond-Chambers said.

The missile test was launched just before the release of the council's Semiconductor Report -- Annual Review 2006.

The report says that Taiwan should become the world's leading manufacturer of DRAM chips this year.

Taiwanese DRAM makers, led by Powerchip Semiconductor Corp (力晶半導體), grabbed 17.8 percent of global market share in the last quarter, ranking second after South Korea, and up from 13.7 percent in the first quarter of 2005, market researcher DRAMeXchange's latest tallies showed.

The council was concerned about the potential costs to the US if that critical supply chain were severed by "acts of God" such as an earthquake similar to the 1999 tragedy, or if provocative actions by Beijing result in an extended supply chain disruption, the council said.

Aside from DRAM chips, Tai-wanese companies are also responsible for a significant share of global electronics products, including 82 percent of notebook computers, 98 percent of computer motherboards and 72 percent of liquid-crystal-display monitors, the government-funded Institute for Information Industry (資策會) said.

US corporations spent US$73.3 billion last year on sourcing electronics made by Taiwanese manufacturers, up 11 percent from 2005, the council said, citing statistics from the Ministry of Economic Affairs.

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