The increasing tensions between China and Taiwan have caused Canada to think about investing in its own tech sector so it won't be affected by the possible decrease in semiconductors. 

Canada's Take on Semiconductors

The relations between the two Asian countries have become tense in the past couple of months as China carried out military drills around Taiwan, which is the largest contract microchip maker in the world. 

If tensions between the two countries persist, deliveries of the Taiwan Semiconductor Manufacturing Company or TSMC's semiconductors to other companies in the world could slow or be halted. TSMC chips power several electronics, including iPhones and fighter jets. 

Hamid Arabzadeh, the chief executive of Ranovus, said that the tension between China and Taiwan is affecting all the countries in the world. 

Taiwan's Hold on Semiconductors

According to Global News, Taiwan is responsible for 60% of the global revenue in 2020 for the sector, and TSMC held 53% of the global foundry market in the third quarter of 2021. 

TSMC dwarfs Samsung's 15% market share with 85% of the market. The company is deemed important because it has a monopoly on the most advanced chips like 10 nanometres or smaller and has mastered producing them with less energy. 

Also Read: Acer: Global Chip Shortage to Happen Until 2022-Laptop, Semiconductor Production Faces Crisis

As for Canada, the country lacks semiconductor foundries and building new ones to rival TSMC's capabilities would take capital and time, according to Abby Times.

Former chair of the Semiconductor Industry Association in the US, Keith Jackson, said in Fortune magazine in 2020 that the facilities can cost up to $20 billion to build. That is twice as expensive as a modern aircraft carrier. 

Arabzadeh said that the production of building semiconductor foundries is also tedious. It can take three months to engrave and transform the silicon wafers into semiconductors, and the process can also be upended by minor disturbances. 

However, there are some ways to offset the impacts of geopolitical tensions that could affect the chip deliveries without building more foundries in Canada. 

Dual sourcing could be a solution where companies have multiple suppliers, so if one encounters a problem, the other can step in to finish the production and distribution, according to Financial Post.

However, switching from one source to another will require frequent software changes. 

Arabzadeh added that when the tension with China happened, all of the semiconductor consumer companies in Canada and other countries began to redesign their tech sector.

They are not thinking of having chips manufactured in all different parts of the world, not just in Taiwan. 

Diversification of Semiconductor

The push for diversification has been happening since 2020 in part of the global chip shortage prompted by COVID-19 lockdowns, increasing the demand for electronics and increasing shipping costs. 

The US government has been at the forefront of the push for diversity with a multibillion-dollar wave of investment in chip factories because the country is worried that it relies on Taiwan for chips used in smartphones, vehicles, and medical devices. 

Biden's administration is now looking to manufacture and produce semiconductors made in the US by partnering with TSMC. 

TSMC is set to build a plant in Arizona that is expected to open by 2024.  

Related Article: MIT Discovers New Material for Processors - Semiconductors Better Than Silicon?

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Written by Sophie Webster