US tells Taiwan room exists for further progress on chip supplies

TAIPEI – The United States is grateful for Taiwan’s efforts to fill a global semiconductor shortage and more improvements can be made to speed up supply chains, the top U.S. diplomat in Taipei said on Friday.

Semiconductor supply shortages over the past two years have in some cases caused production lines for automobiles and home appliances to shut down, and the United States has repeatedly urged Taiwan, a major chip maker, to do more.

Sandra Oudkirk, director of the American Institute in Taiwan, told an industry forum the COVID-19 pandemic has both increased demand and “stressed” the global trading system.

“As Taiwan’s semiconductor companies continue to churn out chips at an accelerating pace, logistical challenges have hampered efforts to keep up. We’ve all heard about the long supply chains that stretch from the factory to the showroom. We’ve made improvements, but there’s still room for improvement,” she said in a transcript provided by her office.

Oudkirk pointed to data from the US Department of Commerce that showed the average chip inventory in the United States has fallen from 40 days to less than five days over the past two years.

Companies in Taiwan, home of the world’s largest custom chipmaker TSMC, have said they expect supply shortages to persist this year and likely into 2023, even as they ramp up capacity expansion.

Oudkirk said the United States deeply appreciates Taiwan’s companies’ willingness to deal with the problem.

“They ramped up production when the auto industry called for help; They’ve been working with educational institutions to ensure we’re preparing the next generation of engineers,” she added.

Washington has been keen to get more Taiwanese companies to follow TSMC’s example and build plants in the United States. TSMC, a major supplier to Apple Inc., last year began building a site in Arizona where it plans to spend $12 billion to build a computer chip factory.

Oudkirk said they would organize a delegation of Taiwanese semiconductor companies to visit Phoenix, Arizona, this summer to encourage further investment.

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