New Delhi: A China-Taiwan conflict can result in a loss of trillions of dollars globally as the latter is a major player in the world's essential semiconductor industry, Chris Miller, the author of 'Chip War', told R Sukumar, editor-in-chief, Hindustan Times at the Hindustan Times Leadership Summit.
"I think the challenge right now is that it's very difficult to confidently predict where the politics will go and where Chinese policies vis-a-vis Taiwan will end up. So companies and countries are trying to reassess their supply chain dependence on both China and Taiwan as a result of this uncertainty and companies are finding it very difficult to completely insure themselves against China-Taiwan risks but they have to because the costs are vast," he said.
He said the world economy will take a hit of trillions of dollars within two quarters if China decides to blockade Taiwan.
"The best estimates of the cost, in case China were to blockade Taiwan or otherwise disrupt semiconductor shipments is that just in the first couple of quarters there will be trillions of dollars of damage done to the global economy and so it's a challenge that neither governments nor companies can afford to ignore even though it's a very difficult problem to solve," he added.
He said when it comes to developing a semiconductor ecosystem, China has made big strides but not in an economically viable way.
{{/usCountry}}He said when it comes to developing a semiconductor ecosystem, China has made big strides but not in an economically viable way.
{{/usCountry}}Also read: HTLS Day 2: Chris Miller says 'design expertise' can help India in global ‘chip war’
"Measured by the metrics that Chinese leaders are looking at, which is the share of chips that China produces domestically, they are making progress. It is still the case that China is hugely reliant on importing high-end chips from Taiwan, South Korea, Japan and the US. But compared to 10 years ago, China imports less as a share of its overall chip consumption. But a lot of this has been done in a non-economically viable way. It has been happening because the Chinese government has been pouring really fast sums into the industry and I think that suits the interests of Chinese leaders who are concerned with security considerations. It's probably not in the larger interest of Chinese citizens because it's driving up costs and spending huge sums of money without actually producing many viable businesses. China shows the challenges of trying simply by brute financial force to break your way into the industry. You can do it in certain ways but the resource expenditure is vast. Tens of billions of dollars every single year and even then that doesn't guarantee you actually have viable companies at the end," he said.