Tsai Ing-wen, the president of Taiwan, warned that the semiconductor industry faces new and "volatile" issues, but she also pledged that her administration would collaborate with the business to address them.
According to comments made by Tsai at an industry gathering in Taipei late on Wednesday, "the continued success of this industry comes in the face of unprecedented global challenges in recent times, including considerable uncertainty around supply chains."
"Even today new challenges continue to arise, making the situation more volatile. But as in the past, our government will work closely with the industry to get through these challenging times," she added. "Time and again Taiwan has proven its agility and resilience in meeting challenges and ensuring that our semiconductor industry maintains its world-leading status."
Taiwan is a key producer of semiconductors used in everything from washing machines and cellphones to data centers and fighter jets and is home to the largest contract chipmaker in the world, TSMC.
Tsai did not mention the difficulties the sector is facing, but since the COVID-19 pandemic started, one of the major issues has been chip scarcity which has slowed down the production of automobiles and several consumer goods.
Consumer demand worldwide is currently declining as a result of rising inflation, recession fears in important Western economies, and the effects of the conflict in Ukraine. This might have an impact on Taiwanese chip companies and the island's export-driven economy.
Although the United States is Taiwan's most significant international sponsor, the government has pushed Taiwanese businesses to establish plants there while also working to guarantee Taiwan maintains its top worldwide position.
"When it comes to the most advanced chips, Taiwan always leads the way," Tsai said.
The COVID-19 pandemic has had a big impact on the technology industry, putting pressure on foundries, driving up demand for old items, and requiring firms to reorient production. Although there are indications that chip producers are addressing the issue, we believe that these shortages will persist into the following year.
Large plans for semiconductor capacity investments and committed support for those industries dealing with severe imbalances should help reduce some of the pressures, but they could also result in abrupt supply fluctuations that again take investors and businesses by surprise.
The outcome for the global chip market will also be heavily influenced by Taiwan's performance in its conflict with COVID-19. Investors will need to keep a close eye on Taiwan, in either case, to see how the semiconductor narrative develops.