It is no news that the visit of the US Speaker of the House of Representatives, Nancy Pelosi, escalated the political tension between the Republic of China and the island of Taiwan, sitting just 100 miles southeast of China. The US official visited the island despite potent threats of military action from the Chinese government.
China has since then sent several military ships and planes across the Taiwanese territories and even launched missiles over the island’s capital, Taipei.
These military drills have grounded flights and disrupted shipping activities in one of the top zones known for global trade. But how does all of these affect the launch of Apples, iPhone 14?
Let’s dive in
TSMC Limited, which is one of Taiwan’s biggest companies, is a multinational semiconductor company with recognition all over the world. In fact, the company is one of the leading semiconductor manufacturers globally. American company Apple is TSMC (Taiwan Semiconductor Manufacturing Company) major customer, as the company alone accounts for one-fifth of TSMC’s total revenue.
Semiconductor companies design and produce microchips that are used in devices, including phones, radios, televisions, medical equipment, video games, etc.
After TSMC produces these microchips, the company ships it to Pegatron Corporations in China where Apple assembles these iPhones. As a result of the escalated tensions between China and Taiwan, the Chinese Communist Party (CCP), the sole ruling party in China, has announced that there be no mention of “Taiwan” or “Republic of China” in any shipping document. This implies that most or all of the hardware from Taiwan might be returned back to the island, therefore delaying the production of iPhone 14 expected to be out by October 2022.
Images from Nancy Pelosi’s visit to Taiwan showed the US official meeting with Pegatron Vice Chairman, Jason Cheng and other top executives. As a result, this crisis is shaping up to be a trade war between China and Taiwan with Apple and other US-based companies caught in between.
What to watch?
Apple has ordered the removal or replacement of labels bearing “Made in Taiwan” or “Republic of China”. Apple would also be seeking solutions from other manufacturers of semiconductors.