by Peter Schiff, Schiff Gold:
American-made weapons will soon be bound for Taiwan, American lawmakers are telling Taiwanese President Lai Ching-te, sending shockwaves of uncertainty through electronics and metals markets this week.
In a pointed “celebration” of Lai’s recent inauguration, Chinese military aircraft and warships have been conducting large-scale drills around the island. China considers Taiwan a strayed member of its territory and hasn’t ruled out the use of force to assert its claim.
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“China will surely be reunified,” Chinese President Xi Jinping said in his New Year’s address. “Compatriots on both sides of the Taiwan Strait should be bound by a common sense of purpose and share in the glory of the rejuvenation of the Chinese nation.”
Michael McCaul, U.S. House Foreign Affairs Chairman, told Fox that the recent Chinese demonstrations are the most “provocative” yet. If China attacked Taiwan, McCaul predicted during his visit to the region, “it would make Iran shooting into Israel look like child’s play.”
“I think right now, we will probably lose,” he said.
One likely victim of such a conflict would be Taiwan’s semiconductor industry, which holds about 70% of the world market share. Total industry value is expected to set a record this year at $630 billion—but that could change if China invades Taiwan and, as McCaul warns, “the island doesn’t have the capacity to defend itself” or its industry.
“Everybody that has phones, cars—we have advanced weapons systems—everything’s dependent on semiconductors and this island, over time, because we’ve offshored [manufacturing],” McCaul told Fox News Digital. “And the shutdown of what’s happening [in Taiwan], semiconductors, would really shut down the world.”
Changes in the market for semiconductors mean changes in the market for many base metals, including silicon, germanium, and gallium, all of which are critical components for semiconductor manufacturing. Gold is also a key component of the production process because of its anti-tarnishing properties.
With a semiconductor shortage could come other electronics shortages, squeezing markets for everything from refrigerators to cell phones to electric vehicles. There’s precedent for such a shakeup, which occurred during the semiconductor shortage of the COVID-19 pandemic—and back then, the economic pandemonium didn’t stop short at consumer electronics.
“The recent semiconductor shortage isn’t some far-off issue—it affects everyday citizens around the globe,” the Council on Foreign Regulations reported last year. “Supply-chain challenges can yield price hikes for consumers and lost jobs for manufacturers. Companies laid off thousands of workers [during the COVID shortage] because the United States lacked chips.”
