In February 2023, Taiwan's chip exports to mainland China and Hong Kong fell for the fourth month in a row year on year. The reasons were the growing tension between Washington and Beijing and the fact that demand for electronics continues to decline around the world.

Exports of chips, which are the most important elements of electronics, computers and smartphones to mainland China and Hong Kong, decreased in the specified month by 31.3% year-on-year, according to the Taiwanese Ministry of Finance. This is the worst decline since 2009. Moreover, this is worse than in January, when exports fell by 27.1%.

According to Bloomberg statistics based on official data, the share of Taiwanese integrated circuits exported to China fell to its lowest level since February 2019.

However, the export of Taiwanese semiconductors has declined not only to mainland China. Global shipments from the island were down 17.3% yoy last month, although exports to the US were up 22.3%. Taiwan is the world's largest manufacturer of advanced chips. However, in recent times, the demand for relevant advanced technologies that strengthen the island's economy has fallen significantly. The geopolitical crisis also contributed to the recession to a certain extent.

Image Source: Bloomberg

Since mainland China intends to develop its own advanced semiconductor technologies and is the world's second largest economy, the US is actively trying to block the development of a geopolitical rival in this area. In January, the US agreed with the Netherlands and Japan to limit exports of some advanced chip-making equipment to China.

Recently, Chinese leader Xi Jinping criticized the US for trying to thwart China's technological progress, urging the country's private businesses to overcome "containment" from the United States and several other countries. Notably, Beijing rarely resorts to direct harsh criticism of its largest trading partner.