Taiwan’s Economic Ministry is asking domestic chip manufacturers such as Taiwan Semiconductor Manufacturing Co to help “like-minded” economies alleviate the global shortage of automotive-related chips.

The ministry said it had received requests since the end of last year from several nations through diplomatic channels. The countries are asking Taiwan to help look into the lack of chips for the auto industry, which has led to production cuts by leading carmakers such as Nissan Motor, Honda Motor, Ford Motor, Daimler and Volkswagen.

“We’ve got requests from the US, Japan and Europe — all like-minded countries to Taiwan. The issue is being handled at a higher level in the [Taiwanese] government,” a source with direct knowledge of the matter told Nikkei Asia.

The ministry said it had asked local chipmakers including TSMC, the world’s largest contract chipmaker, and United Microelectronics Co, the fourth biggest, to provide assistance. The companies supply global automobile chip developers such as NXP, Infineon, Renesas Electronics and STMicroelectronics.

The chip shortage impacts major automakers worldwide. Germany’s Volkswagen has reduced output at sites in China, North America and Europe due to a lack of semiconductors, while Ford has idled some production in the US.

Global auto production will be lowered by about 1.5m vehicles due to the shortage, mainly in the first six months of the year, Mitsubishi UFJ Morgan Stanley Securities estimates.

“The semiconductor shortage will probably continue for several months,” said a senior official at Japan’s Ministry of Economy, Trade and Industry. “Industries under pressure such as automobiles are likely to ask for increased production.”

In Japan, Honda is expected to cut production of models such as its Fit subcompact by about 4,000 units this month, while Nissan has begun to reduce output of its mainstay Note subcompact. Toyota Motor is being forced to adjust production at sites in the US and elsewhere. Subaru has suspended operations on some days at its sole Japanese production facility in Gunma Prefecture.

China depends on chips made overseas and its auto industry fears a predicament more serious than that in other countries because most of the top automotive chipmakers are in Europe, Japan and the US.

Taiwan has the world’s second-largest semiconductor industry by revenue after the US. The island is home to other vital companies in the global chip supply chain such as MediaTek, the world’s biggest mobile chip developer, and ASE Technology Holding, the largest chip packaging and testing house. As industry leader, TSMC is also the sole manufacturer of iPhone processors, and it supplies Qualcomm, Nvidia and most other renowned chip developers worldwide.

The trade and tech tensions between the US and China over the past two years have highlighted Taiwan’s importance in the global supply chain, as semiconductors are the heart and brain of technologies from smartphones and autonomous driving vehicles to space tech. TSMC is caught between the two superpowers as it once counted Huawei Technologies as a key customer, while also supplying Xilinx, an American tech company whose chips are used for F-35 fighter jets.

“The international carmakers are not Taiwanese chipmakers’ direct customers, but our chipmakers supply automotive chip developers and then these auto chip developers sell the chips to carmakers,” the ministry said. Planning by the auto chip companies to prepare lower inventories amid the industry’s slow season also had weighed on the imbalance of the supply and demand, it added.

TSMC said its automobile-related customers continued to reduce orders in the July-September quarter and only started to place additional orders in the final quarter of 2020. However, demand remains strong for consumer electronics and for applications related to high-performance computing.

“In the near term, as demand from the automotive supply chain is rebounding, the shortage in automotive supply has become more obvious,” CC Wei, TSMC’s chief executive, said at an investor conference on January 14. “This is our top priority, and we are working closely with our automotive customers to resolve the capacity support issues.”

Strong demand for items such as notebook computers, smartphones and servers has led to unprecedented shortages of items including processors, microcontrollers, sensor chips, display panels and driver integrated circuits. At one point, Apple reallocated some iPad components to its iPhone 12 range due to a shortage of power chips and “lidar” components used for depth-sensing imaging functions.

The global chip shortage has pushed governments to step in to help carmakers. Peter Altmaier, Germany’s federal minister for economic affairs and energy, wrote to the Taiwanese government asking for help solving the chip supply problem, Bloomberg reported. US automakers have asked Washington to assist them with the supply shortage, as the issue could restrict production and hurt the US economy.

A version of this article was first published by Nikkei Asia on January 24, 2021. ©2021 Nikkei Inc. All rights reserved.