With Tensions Rising Between China and Taiwan, You Need an Inventory Storage Partner

By Logan Wamsley

As 2022 continues forward, it appears to be increasingly likely the long-brewing political conflict between China and Taiwan is going to soon take on a more concrete form. This has drastic implications for the world beyond these countries’ borders in countless ways, but one of the most concerning effects will be on the global supply chains — specifically, the world’s supply of semiconductors that power virtually every element of modern society from phones, to healthcare devices, to aircraft, to automobiles.

It is estimated that Hsinchu Science Park-based Taiwan Semiconductor Manufacturing Company (TSMC) is responsible for 65% of the world’s semiconductors, and 90% of the world’s advanced chips. Comparatively, the U.S. currently manufactures 10%. In fact, TSMC alone has become so critical to maintaining global semiconductor inventory that even China itself, despite a variety of recent political and military actions ratcheting up tensions between the two nations, has been reluctant to block semiconductor trade due to its reliance on them (China manufactures only 5% of the world’s semiconductors).

These realities have gained even more tension in recent news as military tensions in the Taiwan strait have led to early deliberations between Washington, Taipei, and the EU regarding possible sanctions against China. Although such measures are not new; in 2020, for example, the U.S. enacted several sanctions on Chinese officials and companies who helped back Beijing’s imposition of a security law that clamps down on dissent in Hong Kong. What is new however is the possibility of extending these sanctions to include sensitive technologies, including computer chips.

For a global supply chain that is still dealing with the lingering effects of the COVID-19 pandemic, raw materials shortages, and disruptions caused by Russia’s conflict in Ukraine, this poses something of a doomsday scenario. Companies across the industrial landscape, now “reading the tea leaves” and predicting significant, long-lasting shortages of critical electronic components and semiconductors. If a solution is not found to guarantee business continuity through at least enough time for other countries such as the U.S. to solidify their own chip manufacturing base, the consequences could be dire.

The natural solution, is, of course, to purchase and stockpile semiconductor inventory now. With this, however, comes two issues: upfront costs and storage. While inventory storage is a significant organizational risk, an equal risk is limiting cash liquidity by tying up budgets in on-hand inventory that may not be needed for several years. But even if this is manageable, very few companies have the infrastructure in-house to safely house sensitive electronic inventory while still ensuring optimal functionality at the time of assembly.

This can go far beyond climate-controlled storage capabilities. Many companies who require complex, specially-designed ASICs for their unique applications, for example, acquire their inventory in raw die and wafer form. While this is ideal in that it can be stored in this form for many years without issue, it must be done so in extremely controlled climate conditions with highly-regulated humidity. Even slight changes in moisture content in the atmosphere are enough to render the die inoperable. Building such facilities requires considerable investment, and very few have the ability to do so and require the use of third-party storage solution partners.

However, despite the obvious market need for such solutions, partners capable of maintaining more complex storage specifications over long terms are extremely rare. This, however, is what makes Parstat’s storage solution so special. Not only do we offer industry-leading desiccant dry storage cabinets for long-term die and wafer storage, but our cabinets are also stored in the storage industry’s only custom-storage vault specifically designed for sensitive electronic component storage. Within the vault, not just die and wafer but any form of irreplaceable inventory can be stored in an environment completely impervious to fire, flood, earthquake, geopolitical risk, and even electrostatic discharge. This is exactly of the largest and most trusted brands in the world have trusted Parstat with their inventory storage needs — simply, there is no one else who can do what we do. And, through our Inventory Ownership Solutions, we purchase it on our customers’ behalf so they don’t have to, maintaining capital liquidity in the process.