US Sends 200 Troops to Train Taiwan Army, Global Supply Chains Should Be on Notice

War is never something one likes to think about, especially as another war is already occurring in Ukraine. But with tensions between China and neighboring Taiwan continuing to escalate, the repercussions of another such conflict is something manufacturers across the world need to take into account in their future plans.

The latest development in this story is telling. According to a recent report from Fox News, the U.S. is preparing to send 100 to 200 troops to Taiwan to aid the Taiwanese Army for training. While 200 troops is still a modest number, just one year ago, only 30 American troops were stationed within Taiwan’s borders. According to the U.S. military, they will focus on training for U.S. weapon systems, as well as maneuvers that would counter a hypothetical Chinese offensive.

Not only is this a concerning sign that real conflict may be more likely than it even was a year ago, but it also illustrates the U.S.’ ongoing commitment to back Taiwan. This is the case for a number of reasons both ideological and practical, but from a business perspective, the U.S. has a vested interest in maintaining strong ties to Taiwan because of its prominent role in semiconductor manufacturing. Since the COVID-19 pandemic. Many of the industries that define U.S. manufacturing have been facing major chip shortages that have hampered production. Most notable among these is the automotive industry, but healthcare, consumer electronics, energy, and aviation have all been severely affected.

Compounding the issue further, these industries are now increasingly competing buyers in the generic chip and semiconductor markets. Automotive and energy, for example, are both in the middle of a massive shift toward ESG-conscious products such as EVs and solar panels. According to estimates, the average electric vehicle uses about 3,000 chips, which is more than three times the number found in a non-electric vehicle. Some of these chips are composed of trademarked ASICs that can be purchased an assembled in market isolation, but many others are the same generic components found in phones, laptops, MRI scanners, kitchen utilities, and virtually every device in modern life. Should Taiwan, which is responsible for 65% of the world’s semiconductors and nearly 90% of the world’s advanced chips, be removed from the supplier market, the consequences could be catastrophic.

For manufacturers considering supply chain management solutions that provide insulation from major disruptions, news like this should be enough to turn these considerations into action. Sufficient quantities of generic electronic components and semiconductors are no longer certain day-to-day, and should the worst come to pass, the companies with the foresight to purchase their inventory upfront for most or all of their products’ production runs will be the ones that survive.