Amid China-Taiwan tensions, FTI warns of chip shortages

FTI chairman Kriengkrai Thiennukul issued the warning during the Thailand Industry Sentiment Index (TISI) monthly press conference for July on Wednesday.
 
He warned that if geopolitical tensions between China and Taiwan prolonged for a few months, semiconductors or chips, which are critical components in many high-tech industries, will be in short supply.

Currently, no industry is affected because they all have enough chips in their inventories to last another 2-3 months. However, if China and Taiwan continue their live-fire military drills for an extended period of time, the supply shortage would be serious, he said.

Besides being well-prepared, Thailand should seize the opportunity to become a chip manufacturer, he added.

Taiwan's TSMC is the world's largest semiconductor-maker, accounting for 60 per cent of total market share. However, amid the recent tensions, some news reports claim that the company is considering relocating its chip factory to other countries, such as Singapore and the United States.

"I heard that Singapore is approaching them to grab this opportunity, while the US has just signalled its readiness by approving the Chips and Science Act," said Kriengkrai.

He explained that Thailand's main industry is still old technology such as discs, so now is the time for the country to grab this opportunity to embrace change.

Meanwhile, the government has already established the Eastern Economic Corridor (EEC) project to promote the development of new high-tech industries. Hence, Thailand has the potential to be Taiwan's second or third choice.

Kriegnkrai also pleaded with the government to keep electricity prices under control so that Thai industries can remain competitive. If the government must raise the price, he believes it should take into account the current market situation.

The latest Thailand Industry Sentiment Index (TISI) for July shows an increase to 89.0 over June. The index has risen for two consecutive months. The index numbers show that overall purchase orders, sales, volume of production and turnover have risen.

The manufacturing sector expanded as a result of increasing demand for industrial products, both durable and consumer goods, in the domestic and export markets, especially the US, China, Japan and India among others. Besides, the easing of China’s lockdown restrictions in major cities has benefited Thai exports.

In addition, the reopening measures and the cancellation of the Thailand Pass system from July 1, along with the depreciation of the baht, have helped the Thai economy and tourism sector gradually recover. Moreover, higher incomes of the agricultural sector have led to an increase in purchasing power in the region.

The survey was conducted in July, covering 1,238 enterprises from 45 industry clubs nationwide. It unveiled factors of concern such as global economy (72.2 per cent), domestic politics (40.3 per cent), loan interest rates (35.5 per cent), while fuel prices (80.7 per cent), domestic economy (51.8 per cent), Covid-19 situation (50.1 per cent), and THB/USD exchange rates in exporters’ view (32.0 per cent) have helped ease enterprises’ concerns.