China-Taiwan Conflict:  Could Aggravate Catastrophic Semiconductor Shortage

The U.S. Navy has deployed four warships east of Taiwan as U.S. House of Representatives Speaker Nancy Pelosi makes her way to visit the country. China had previously warned that its military would not “sit idly by” if Pelosi were to visit Taiwan.

Pelosi spent the night in Taiwan’s capital, Taipei, on Tuesday, August 2 and departed August 3.  She had been warned not to do so by officials from China, who claim sovereignty over the self-ruled island.

While the loss of life would clearly be the worst consequence if conflict were to break out, the heightened tensions also highlight the world’s incredible reliance on Taiwan for semiconductors. It’s an issue that’s especially prescient given the ongoing global impact of Russia’s invasion of Ukraine — such as an impending gas crisis in Germany due to Russia’s squeeze on gas supplies.