Thailand chips away at US trade deficit with 62% increase in chip market exports

The United States has been experiencing a growing deficit in its chipmaking trade with Asia, but the good news is that Thailand is helping to chip away at that gap. According to US Census data, US imports of chips grew 17% from last year to US$4.86 billion in February, with Asia accounting for 83% of that total.

Over the past three years, Thailand has been seen as an ailing patient trying to recover from Covid-19. The kingdom’s malady-ridden economy and tourism sector needed more than two vaccine doses and a booster shot to get back on its feet but over the past year, the Land of Smiles has emerged from convalescence much stronger. Tourism is flourishing and exports are on the increase, and that includes the chip industry.

Thailand, Vietnam, India and Cambodia have emerged as early winners this year as semiconductor production begins to move away from traditional centres such as Taiwan and China.

India saw its semiconductor shipments increase 34 times to US$152 million, while Cambodia clocked in an impressive 698% growth, falling just shy of Japan at US$166 million, an amount that would be unheard of in years past, Bloomberg reported. But it is Thailand that has emerged as a strong contender in the US chip market with a 62% increase in trade with the US.

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Vietnam and Thailand, both of which have much bigger slices of the chipmaking market, increased their US trade in the sector by 75% and 62%, respectively. Vietnam has accounted for over 10% of US imports for seven straight months. US officials have expressed growing concern about their country’s overreliance on overseas suppliers, such as Taiwan, and South Korea, for the most advanced chipmaking.

US Commerce Secretary Gina Raimondo has warned that the nation’s “dependence on Taiwan for chips is untenable and unsafe.”

There has been a bit of a semiconductor war between Taiwan, China, and the United States since the late 1990s, when Chinese companies began to increase their production of semiconductors and threatened to corner the market. In response, the United States and Taiwan, which had long been the dominating forces in the semiconductor industry, began to increase production and establish new chip factories in hopes of maintaining their dominance.

The conflict has been ongoing since then and resulted in an ongoing battle of subsidies, tariffs, and other forms of protectionism, all of which have contributed to the growth of the industry but have also caused tensions to rise between the three countries.

Tensions were heightened last year when the US threatened China with military action if it invaded Taiwan. It appeared that Taiwan was fanning the flames of war between the two economic powerhouses, and as a result, China denied the province the raw materials to make semiconductors.

In August last year, US President Joe Biden signed into law a multibillion-dollar bill boosting domestic semiconductor and other high-tech manufacturing sectors to try and counter being monopolized by China. The Chips and Science Act includes around US$52 billion to promote the production of microchips and relatively hard-to-make components at the heart of almost every modern piece of machinery.

The February figures are the latest to show the US diversifying its electronics supply chain, including through moves such as Apple’s gradual shift of iPhone production out of China to places like India. Malaysia, a traditional stronghold for chip packaging, still held the lead in US imports but saw its share drop to 20% of the February total.

Semiconductors are a critical smart component in everything from computers and phones to home appliances, and deteriorating relations between Washington and Beijing have forced each nation to rethink its supply strategies around them. Taiwan, often a flashpoint between the two, increased shipments to America by 4.3% from last year and accounted for 15% of its imports.

World News

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Bob Scott

Bob Scott is an experienced writer and editor with a passion for travel. Born and raised in Newcastle, England, he spent more than 10 years in Asia. He worked as a sports writer in the north of England and London before relocating to Asia. Now he resides in Bangkok, Thailand, where he is the Editor-in-Chief for The Thaiger English News. With a vast amount of experience from living and writing abroad, Bob Scott is an expert on all things related to Asian culture and lifestyle.

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