Trade facilitation, market size, and supply chain efficiency of Taiwan semiconductor companies

Cheyuan Liu, Tao He, Fangzhou Liu, Shutao Liang and Chunyu Zhang

PLOS ONE, 2024, vol. 19, issue 10, 1-22

Abstract: In an environment marked by global economic volatility and geopolitical uncertainties, the stability of Taiwan’s supply chain takes on heightened importance, particularly given Taiwan’s crucial role in the global semiconductor supply chain. In recent years, semiconductor companies in Taiwan have faced increasing inventory pressures, which will reduce their competitiveness and increase operational costs over the long term. Although previous studies have explored the influence of trade facilitation on macroeconomic and trade efficiencies, its specific impacts on the semiconductor industry have been less frequently addressed. This study integrates corporate inventory, trade facilitation, and geopolitical factors within a unified analytical framework to construct a model that explores mediating and moderating effects. This study conducted regression analysis on data from 52 Taiwan-listed integrated circuit companies from 2014 to 2022. Contrary to traditional findings that trade facilitation decreases inventory in other industries, it predominantly fosters inventory accumulation within Taiwan’s semiconductor sector by expanding market size, thereby affecting supply chain efficiency. Moreover, geopolitical factors were found to intensify the effects of trade facilitation on corporate inventory. Elevated geopolitical risks lead to greater inventory accumulation, which ultimately threatens long-term competitiveness and diminishes the semiconductor industry’s advantage in Taiwan, further influencing supply chain efficiency. Consequently, this study recommends that to more accurately forecast market size, semiconductor companies in Taiwan are encouraged to expand their manufacturing investments in Chinese mainland. Additionally, the prudent handling of cross-strait relations by the Taiwan authorities is an important strategy to mitigate geopolitical risks affecting the semiconductor supply chain.

Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:plo:pone00:0299322

DOI: 10.1371/journal.pone.0299322

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