Morgan Stanley Warns of 11-Day LNG Cliff in Taiwan Threatening Global Chip Supply
Morgan Stanley reports that the global semiconductor supply chain faces a new bottleneck due to the closure of the Strait of Hormuz, which threatens essential energy and chemical inputs for advanced chip manufacturing. Taiwan's LNG reserves typically last about 11 days onshore, raising concerns about semiconductor production stability. Additionally, a secondary sulfur shortage may disrupt critical battery and chip material production. Analysts warn of rising costs and potential impacts on AI and smartphone chip supplies amid these disruptions.
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Morgan Stanley's report highlights a looming 11-day LNG cliff for Taiwan, which threatens the stability of its semiconductor production reliant on LNG imports. The closure of the Strait of Hormuz risks a prolonged disruption to energy supplies necessary for chip manufacturing.
Taiwan Semiconductor Manufacturing, responsible for 90% of advanced chips, consumes a significant portion of Taiwan's electricity. In addition, a potential sulfur shortage due to blocked oil refining activities could hinder the extraction of key metals used in chip components. This situation could lead to rising costs and a decline in consumer demand for tech products, impacting the overall tech sector amidst inflationary pressures.
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