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US lawmakers ask Taiwan envoy for assistance in auto chip shortage

Chip shortage due to car industry miscalculating needs: US-Taiwan Business Council

Taiwan, US flags. (Getty Images photo)

Taiwan, US flags. (Getty Images photo)

TAIPEI (Taiwan News) — Amid the global chip shortage, several American lawmakers have approached Taiwan’s representative to the U.S., Hsiao Bi-khim (蕭美琴), for assistance.

As the car industry has struggled with a severe shortage in automotive chips, several carmakers, including Ford and General Motors, have had to scale back production. This has caused several members of Congress to reach out to Hsiao for help this month in addressing the lack of chips, CNA reported.

Hsiao said she explained to them that part of the reason for the shortage was the fact that many car chip suppliers cut orders last year due to the pandemic, which then caused chipmakers to find other customers for their chips. She also added that Taiwanese chipmakers are working hard to increase production to meet the excess demand.

However, as Taiwan foundries have already had most of their capacity booked by consumer electronics makers, the likelihood that the automotive chip shortage will be solved in the short term is unlikely.

The issue of chip shortages was also raised at the Senate confirmation hearing of U.S Trade Representative nominee Katherine Tai by U.S. Senator Debbie Stabenow. “Right now, for example, our manufacturers of automobiles, home appliances, other products, are being forced to shut down a line or a plant temporarily because of a single company in Taiwan, which has reduced its shipments of semiconductor chips to our manufacturers.

"It’s only a slight change, but we’ve seen profound losses, billions of dollars in losses in key U.S. manufacturers, because of that decision.”

Stabenow said that she had also met with Hsiao over the issue and thanked the Taiwan envoy for her attention to the matter.

In response to Stabenow, President of the U.S-Taiwan Business Council Rupert Hammond-Chambers issued a press release calling the senator’s statement “both incorrect and misleading.”

He went on to explain, “The American automobile industry is currently facing a chip supply issue, but it is primarily a function of the industry itself miscalculating its production needs. At the onset of the pandemic, the U.S. auto industry significantly reduced its orders for chips, expecting a significant reduction in demand for vehicles. That drop in vehicle demand did not materialize fully, and the industry is therefore left with existing chip orders that do not match their manufacturing needs.”

“Companies make orders for chips based on expected demand, and those orders are executed along legally contracted boundaries,” Hammond-Chambers continued. “The absence of enough chips to run American plants is absolutely not a function of any deliberate punitive actions by a Taiwan company. It is instead the result of American manufacturers failing to order enough chips.”

“The suggestion that this situation is a function of punitive action by a Taiwan company is manifestly incorrect,” he went on to say. “Additionally, the view that the U.S government can pressure companies, foreign and domestic, to make changes to legally binding contracts to accommodate preferred business sectors raises serious concerns about the nature of international commerce and the laws that govern it.”