(Tech stock columnist Jon D. Markman publishes Strategic Advantage, a lively guide to investing in the digital transformation of business and society. Click here for a trial.)
Political leadership in China seems determined to take control of Taiwan, its self-governed island neighbor 100 miles away. Here is what it means for investors.
Institutional money managers are worried about the fallout for semiconductors, according to Jim Cramer. The financial news commentator says a China/Taiwan war could knock out the chip sector.
Many companies like Apple ( (AAPL) - Get Apple Inc. Report), Nvidia ( (NVDA) - Get NVIDIA Corporation Report) and Qualcomm ( (QCOM) - Get QUALCOMM Incorporated Report) design advanced semiconductors. However only a handful of firms fabricate the silicon. Taiwan is home to the world’s largest manufacturing facilities. A report from the Semiconductor Industry Association, an industry trade group, notes that Taiwan produces 20% of the world’s chips, and 90% of the most advanced processors.
Chips made in Taiwan power our vehicles, smartphones and next-generation data centers. Lost production, or worse having the country fall under the control of the people’s Republic of China, would devastate the global economy. It could happen overnight.
There is a safe haven, though. It’s Intel, the world’s largest semiconductor firm by production.
Admittedly, the Santa Clara, Calif.-based company has fallen far behind Taiwan Semiconductor ( (TSM) - Get Taiwan Semiconductor Manufacturing Company Ltd. Report), its Southeast Asian rival. TSM contract manufactures for all of the world’s best chip designers, including Apple. Now Intel wants into that business. Reuters notes that managers laid out a plan in March to begin made for hire services.
More importantly, Intel is the likely landing spot for anxious professional investors who need exposure to semiconductors and are worried about Taiwan.
That threat is growing with each day, especially given Chinese President Xi’s new tone regarding investment and the so-called One China objective.
Cramer listed worries about Xi in his themes to watch for the second half of the year.
It’s time for investors to begin planning ahead. Intel is the best way to start