While China is the current go-to country for inexpensive electronics manufacturing services, Taiwan remains a big player in the electronics industry. And they are manufacturing a large percentage of chips needed for all sorts of devices. As we are still reeling from a recent chip shortage, the war clouds brewing between China and Taiwan has the electronics industry on the edge of its seat. Will chip manufacturing be interrupted? Most likely. Can Los Angeles PCBA and those in PCBAs other US locations survive?
China is currently up in arms thanks to the recent visit of House Speaker Nancy Pelosi in Taiwan. The former is currently engaged in circling the island and conducting live-fire military exercises as a show of force or even a prelude to invasion. Such an event could result in another global chip shortage. Wherein the most recent resulted in the skyrocketing of prices of computing devices. This is despite the high demand for computers due to the current pandemic. That chip shortage has indeed affected the performance of electronics manufacturing services as many are forced to scale down production.
The performance of Los Angeles PCBA companies in other locations and other electronics manufacturing services in the US will vary. This depends on how many chips they use during assembly and what sort of chips they use and where those chips are sourced. Since majority of chips are fabricated in China and Taiwan, the industry will no doubt be drastically affected. A war between China and Taiwan would surely cut off supply of chips to the US from both countries, depending on how the US approaches China.
War Between Russia and Ukraine
If the war between Russia and Ukraine can be taken as an example, sanctions were imposed on Russia and no doubt will apply to China as well. Trade with China and Taiwan could cease entirely, and US PCBAs in LA and other locations will be scrambling to other countries for chips and other components. Even if they do succeed, supply may be limited.
Even if Biden’s Chips and Science Act is enacted, it will take much time to take effect. By then, the world will have to make do with what they have and even dig out old gadgets from closets and drawers. Electronics manufacturing services will also have to cut down on staff. Their clients, which are big name companies will have to do the same. This may result in a cascade of unemployment and recession that only the rich and upper middle class can survive. So, all could be at risk, not just the electronics industry should that war occur.
China vs. Taiwan
Despite their mutual political animosity, China and Taiwan actually depend on each other when it comes to business. Especially in the electronics industry. While Taiwan has its own chip manufacturing capabilities, the country’s electronics industry is also dependent on China for its supply chain. Companies such as Acer and Asus have plants in China. And Taiwan’s three out of the top five exports are electronic and electrical products.
If war does occur and the US chooses to stay out (for its own sake if not for the world), the war could end quickly with minimal damage to infrastructure and business. In the meantime, Taiwan chip manufacturing will indeed be interrupted. The Chinese supply chain will remain if the rest of the world condemns only on paper. But becomes reduced once Taiwan is rendered inactive due to war. The world’s chip supply will still be reduced and worsen the ongoing chip shortage.
But if China places importance in maintaining Taiwan’s economy, it will spare the Taiwan businesses it trades with. Thus, the chip manufacturing could return to normal within a year. Is it likely? It would be in China’s best interest. Asian geopolitics will then change drastically, which is another story that not only electronics manufacturing services have to deal with. But the demand for electronics will remain.