China’s economic sanctions may translate into significant Taiwanese investment in microchip manufacturing in Lithuania, which could help ease European semiconductor shortages, Politico has reported.
Lithuania has become subject to undeclared economic sanctions from China after it opened a Taiwanese office in Vilnius.
Lithuanian exporters have said they were facing obstacles in doing business in China. Moreover, Beijing has been reportedly pressuring international companies trading with China to drop Lithuanian suppliers.
In response, Taiwan announced a 200 million US dollars investment in Lithuania, expected to shield the country‘s economy from China's pressure
Some of this investment may come in the form of developing a microchip manufacturing plant in Lithuania.
Taiwan is leading the microchip industry. Its Semiconductor Manufacturing Company (TSMC) earned 54 percent of the market revenue in 2020.
“When we study the possibility for semiconductor investment in Lithuania, we will consider the question in the light of the whole European Union market, because then it will be more sustainable, it will be profitable,” Eric Huang, head of the Taiwanese Representative Office in Vilnius, told Politico.
Europe has recently been facing a microchip shortage which, among other things, has severely disrupted the supply chain of the automotive industry.
To alleviate the situation, the EU has sought cooperation with Taiwan and South Korea, but “their overtures have so far yielded little”, according to Politico.
The Taiwanese investment in Lithuania could become a major breakthrough in this area. Although Taiwan’s investment plans have not been finalised yet, Huang told Politico that nothing was off the table, and that “Lithuania could act as an inroad to the rest of the European semiconductor market”.
But experts caution that Taiwan’s proposed investment in Lithuania is not even close to what would be needed to develop a microchip manufacturing plant.
For example, TSMC’s factory in Arizona, which will start operating in 2024, is estimated to cost around 12 billion US dollars.
According to Huang, it would be difficult for any single EU country to duplicate the Taiwanese model of owning a full supply chain of microchip production.
But individual countries could develop their own strengths within the system, with Taiwan already pledging to help Lithuania in talent development.
“Because Taiwan has such profound experience [in semiconductors], I think our best way is to help our friend to earnestly and sincerely look at the comparative advantages,” Huang said.