Taiwan sees limited impact from Ukraine war on chip supply chain

TAIPEI (Reuters) -Taiwan expects little impact from the war in Ukraine on the supply of key raw materials for semiconductors, the government said on Saturday.

Taiwan is a major chip manufacturer, home to the world’s largest contract chip maker and Asia’s most valuable listed company, TSMC, and key to alleviating a global shortage of semiconductors which have in some cases forced auto production lines to shutter. The cabinet, following a meeting chaired by Vice Premier Shen Jong-chin, said three key raw materials for making chips – the gases neon and C4F6 as well as the metal palladium – would not see much impact. Russia produces neon, C4F6 and palladium.

Taiwanese chip makers use little palladium, and neither Ukraine nor Russia is a major source for that which the island does use, the cabinet said in a statement. Domestic companies also have the ability to refine and “remanufacture” palladium, so there should be no impact, it said. For neon and C4F6, there are already stocks on the island and supply chains are diversified, so “the near term impact is not big”, the Cabinet said.

Taiwan’s energy supplies are also secure, with 145 days of oil reserves and diversified supply sources, while for liquefied natural gas, or LNG, there are also diverse supply sources, it said. Taiwan’s government announced on Friday it would put sanctions on Russia for its invasion of Ukraine, though it has given no details and the island’s exports to the country are minimal.

On the financial markets, the cabinet said the Taiwan dollar’s exchange rate was relatively stable but that the central bank would keep a close watch and take “appropriate management measures” if needed. The finance ministry will also act to stabilise the stock market if necessary, the cabinet said.