(Bloomberg) — While Taiwan has occupied a pivotal position in the world’s electronics supply chain, for the longest time no one thought it had a chance of achieving similar success in the auto industry. The perception was that no local company made the crucial components required by internal combustion engine vehicles.
That changed almost overnight when automakers started to complain about a shortage of semiconductors early last year. In the race to accelerate EVs, car companies now require more electronics components than ever before. That’s underscored by the global push for greener and smarter automobiles and consumers’ Covid-induced preference for private transport.
Previously best known as the exclusive main processor supplier for Apple devices, Taiwan Semiconductor Manufacturing Co.’s name has begun to pop up in almost all conversations about the Great Chip Dearth. Even though autos account for a low-single-digit percentage of TSMC’s overall sales, the Taiwanese chipmaker’s role in the world’s car supply chain was critical enough to bring senior officials from the U.S., Germany and elsewhere to call upon Taiwan to increase production of the microelectronics powering vehicles and other gadgets to aid in the post-Covid economic recovery.
The industry’s EV transition has created opportunities for Taiwanese companies beyond TSMC, too. With EVs requiring many more electronics parts, Taiwan’s tech supply chain is seizing this opportunity with both hands.
Apple’s key assembly partner Foxconn Technology Group has agreed to acquire Lordstown Motors’ Ohio pickup plant, pending regulatory approval, as a key step in its quest to become another Magna. Foxconn, together with Taiwanese peers Pegatron and Quanta Computer, has also been supplying parts to Tesla, while Delta Electronics provides power products or powertrains to GM, Stellantis and other major carmakers.
Still others are choosing to work with tier-one suppliers. PC and server maker Inventec is now supplying motherboards to Bosch and Continental, for example.
The ascension of Taiwan tech was on full display earlier this year at the Consumer Electronics Show in Las Vegas. A partnership between BMW and E Ink, the long-time e-paper supplier to Amazon’s Kindle, resulted in one of the event’s highlights — a concept SUV that can change color.
Local officials here are understandably keen to help more Taiwanese companies pile in. The government in the southern city of Tainan is scouting for suitable land in industrial parks to establish specialized zones for auto-electronics suppliers to build offices and plants.
“As industries undergo digital transformation, they’ll need new materials, new manufacturing models and support from a comprehensive ICT supply chain,” E Ink President F.Y. Gan told me during an interview earlier this year. “This is exactly where Taiwan’s strength lies.”
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