Gas Shortage Concerns Loom In Taiwan Amid War In Gulf Region; How Will It Affect India? Explained

US-Iran War: The US-Israel war with Iran started showing its domino effects as the heat of the armed conflict is reaching other countries. Taiwan, which is a key supplier of semiconductors and chips, is also set to face an energy crisis as it largely depends on Qatar, the US and other countries for its fuel needs.

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How Is India Likely To Be Impacted?

Taiwan is the world's most critical hub for semiconductor manufacturing. The island nation has a fully integrated semiconductor supply chain, including design, fabrication, and packaging. India relies heavily on imports for many semiconductor components, which are crucial for the automobile and electronics sectors. The Island nation holds 21% of global capacity and over 90% of the most advanced chip production. India is also one of the top importers of semiconductors. Tata Electronics Private Limited (TEPL) is establishing a semiconductor manufacturing facility in Gujarat with an investment of Rs. 91,526 crore in a technology partnership with PSMC, Taiwan. Another key project, Vama Sundari Investments Private Limited (VSIPL)'s manufacturing facility in Uttar Pradesh, with an investment of Rs 3,706 crore, is partnered with Hon Hai, Taiwan.

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The automobile, especially India's electric vehicle (EV) sector, will also be affected if Taiwan's energy crisis continues. Taiwanese firms are making significant investments in India's EV sector, focusing on battery manufacturing and, crucially, battery-swapping infrastructure. If war continues, Taiwan's economy will be badly affected.

Taiwan Government's Response To Ongoing Crisis

According to media reports, Taiwan is facing a liquefied natural gas (LNG) shortage. LNG is the spine of the power supply in Taiwan. The nation relies on LNG for roughly 50% of its electricity generation, making it a critical. Taiwan's industries are highly vulnerable as it imports over 99% of its gas needs, mainly from Qatar (30%).

However, Taiwan Minister of Economic Affairs Kung Ming-hsin rejected reports of a fuel crisis in his country, saying Taiwan's natural gas supply will be sufficient through April. He assured that the country has secured almost all the necessary shipments to replenish inventories. Nevertheless, the reality is that if the crisis in the Arabian Sea continues, the oil supply to Taiwan will be affected.