April 19, 2021 | ISSUE 52
The Week at P2
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Sources: Yahoo, Hourglass, Pinterest
Sources: Women’s Voices for the Earth, USA Today, Google
Technology and Water
The headline in last week’s Wall Street Journal was attention grabbing to say the least. “The Chip Shortage Is Bad. Taiwan’s Drought Threatens to Make It Worse”. This wasn't referring to those delicious bundles of warm, fatty carbohydrate wrapped in yesterday’s newspaper. Rather, the article noted that the already tight market for integrated circuits which help run everything from the international space-station to your coffee maker, is about to get tighter, because of the weather. A sobering piece of data: Two thirds of the world’s chips are made in Taiwan and most of those by 1 company, TSM. Apparently, chip-making uses a lot of water and unseasonably low rainfall from typhoons this year has led to water-rationing on the island of Taiwan. Restaurants, hairdressers and even farmers are being made to forego access to water in favor of keeping the chipmakers humming. The current situation is only expected to worsen as chip demand grows across the globe. And, as if Taiwan did not have enough political challenges, national governments have started to get involved to try to secure chip access for their key industries, for example, car-making in Germany. 
 
For those of you not familiar, Taiwan is an island country off the Southeast coast of China. It’s area is a little less than 14,000 square miles, which puts it only slightly larger than Maryland and smaller than 41 US states. Taiwan’s population of 23.4 million puts it a bit larger than Florida. Although a democracy, the political status of Taiwan is contentious. China claims Taiwan as its own and refuses diplomatic relations with countries that recognize the country’s independence. The US has only unofficial relations with Taiwan and recognizes the country as part of China. However, a policy of strategic ambiguity of the US toward Taiwan includes an expectation that the US would come to the island’s military aid if it were attacked by China. In summary, then, the concentration of such a hugely important supply chain in this part of the world should rank with similar concerns about other key parts of the global economy like oil and lithium (for batteries) for example. If, a few weeks ago, you were surprised and concerned to learn that 13% of the world’s traded goods go through the Suez Canal, then you should definitely sit up and take notice of this contested little country 100 miles off the coast of China. 
 
The world is small, with critical pockets of importance for the global economy in some interesting places. Your supply chain probably goes through some or all of these. You might want to look into that a little more deeply. That’s the scoop for this week. 
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