BT runs supply chain ‘war game’ signalling growing fears of China-Taiwan conflict

Telecoms group BT carried out tests on its supply chain in order to prepare for any fallout amid escalating conflict between China and Taiwan in a “war game” that lasted two days last year. The simulation was conducted following the visit of US speaker Nancy Pelosi to Taiwan last year, which China deemed as an act of aggression.

It was in this atmosphere of escalating tension that Dublin-based procurement staff at BT carried out “war games” in which they tested how they would respond in the event of a conflict in the region escalating further, the Financial Times (FT) reported on Sunday, citing people familiar with the matter. 

This revelation is the latest sign that companies — already hit with supply chain disruption in the wake of Russia’s invasion of Ukraine — are making preparations against a backdrop of growing tension in the region.

However, BT was keen to stress to the FT that it “regularly runs simulations to stress test our business.” The telecoms company was contacted by City A.M. but did not immediately respond.

China has been carrying out military drills around Taiwan, which it claims as part of its territory. It launched a further round of drills in the area around Taiwan earlier this month in response to Taiwan’s president, Tsai Ing-wen, meeting US house speaker Kevin McCarthy in California. 

Any disruption to supply chains caused by a conflict would hit industries reliant upon semiconductors particularly hard, since Taiwan produces the majority of semiconductors globally. 

The Economist reports that Taiwan produces over 60 per cent of the world’s semiconductors and over 90 per cent of the most advanced ones. 

One company, Taiwan Semiconductor Manufacturing Company (TSMC), holds a whopping 53 per cent of the global foundry market for semiconductors alone, according to White House research. 

The chips are used in electronic goods from phones to fridges, as well as telecoms, electric cars and a multitude of other embedded systems.

Intel’s European chief Frans Scheper previously warned China that shutting off Taiwan’s exports could cause a “major crisis.”

The US CHIPS and Science Act, passed in August 2022, contains over $200 billion to bolster US semiconductor industries and reduce reliance on global supply chains. 

The House of Commons Business, Energy and Industrial Strategy Committee has previously carried out a review urging the UK government to increase the “resilience” of UK supply chains in its semiconductor strategy. This has not yet been published.