Taiwan chip exports to China sputter on tensions, falling demand

Taiwan’s exports of integrated circuit chips to China and Hong Kong fell for a fourth month in February as Washington-Beijing tensions simmer and demand for electronics continues to drop off. 

Exports of IC chips — which are pivotal components of electronic appliances, computers and smartphones — to China and Hong Kong dropped 31.3% from a year earlier, according to data from Taiwan’s Ministry of Finance. It was the worst decline since 2009, topping January’s 27.1% fall.

China’s market share of Taiwanese IC exports plunged to the lowest level since February 2019, based on Bloomberg calculations of official data. 

The total amount of semiconductors Taiwan shipped worldwide declined 17.3% last month from a year ago. Exports to the US jumped 22.3%. 

Taiwan is the world’s largest producer of cutting-edge chips, and demand has cooled rapidly for that advanced technology that has bolstered its economy. Taiwan is also a geopolitical hotspot, contributing to the fall.

As China has tried to develop its own advanced technologies, the US has moved to block the world’s second-largest economy from doing so. In January, the Biden administration secured an agreement with the Netherlands and Japan to restrict exports of some advanced chipmaking machinery to China.  

Chinese President Xi Jinping recently railed at US efforts to hinder its technology progress, rallying his country’s private sector to help overcome “containment” by the US and other countries — a rare direct criticism of China’s biggest trading partner.

US President Joe Biden has also repeatedly stated that Washington would defend against a Chinese attack of Taiwan, comments that have angered Beijing.