The escalating tensions in Taiwan are raising concerns about a potential semiconductor shortage in the upcoming year, posing a risk to automotive logistics. Taiwan holds a substantial 38.9% share of the global semiconductor market, amounting to $138 billion in export value.
As the presidential election in Taiwan approaches on January 13, increased tensions and regulatory frictions, particularly regarding relations with China, have become prominent issues. The Chinese President, Xi Jinping, focuses on the “reunification” of Taiwan with China, leading to potential conflicts. Predictive insights firm Everstream Analytics predicts Taiwan to be a primary conflict hotspot in 2024, emphasizing that any escalation could severely impact global supply chains.
Taiwan’s significance in the semiconductor market, accounting for 38.9% of the world’s share, adds to the risk. In the event of an invasion, Everstream estimates a staggering US$350 billion would be needed over three years to replace Taiwan’s semiconductor capacity, reported automotivelogistics.com.
Furthermore, escalating trade wars, especially between the US and China, are entangling more commodities and products. Export controls and sanctions are pushing companies to seek new technology suppliers to avoid disruptions. Everstream anticipates a shift in semiconductor facility investments towards the US, with an estimated $190 billion investment in fabrication plants by 2030.
Aside from the impact on semiconductor supply for the automotive industry, an escalation in the Taiwan Strait could affect approximately half of all the world’s container ships passing through it, warns Everstream.
The analytics company advises logistics firms to prepare strategies to mitigate potential disruptions, including building alternative suppliers outside the region, adjusting buffer inventory levels, and securing air cargo capacity. In the extreme case of an attempted invasion, Everstream suggests logistics firms should stockpile critical components and build up alternative suppliers in the region and beyond.
While political tensions in Taiwan are a significant risk, other global threats loom over the automotive logistics and supply chain industry in 2024:
- High Cybercrime Risk:
- Cyberattacks on the industry rose sharply in 2023, up 202% year on year, making it the highest level in the last five years.
- The automotive industry accounted for a tenth of all cyberattacks, impacting logistics, trucking firms, ocean carriers, rail companies, and airlines.
2. Billion-Dollar Weather Events:
- Frequent billion-dollar weather events are disrupting supply chains, occurring every three weeks.
- The impact of weather events is expected to increase in the ‘Era of Extremes’ in 2024.
- Droughts, winter storms, and rising global ocean temperatures pose challenges for logistics firms, requiring careful monitoring and predictive measures to minimize disruptions.
These multifaceted challenges highlight the need for the automotive industry to proactively address geopolitical tensions, cyber threats, and weather-related disruptions in the year ahead.